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In today’s marketing landscape, agencies are both creative partners and financial stakeholders. For Marketing Procurement professionals, that duality creates a constant challenge: securing the best talent and ideas without losing control of spend.
Agency fees often represents the largest marketing investment, yet many brands still lack clarity on what drives those costs. Or how to know if they’re fair.
Getting agency value right isn’t about pushing rates down; it’s about understanding what you’re paying for and what you’re getting back.
This guide brings together insights from across RightSpend’s series on agency pricing to help you benchmark costs, negotiate transparently, and create stronger, more accountable agency partnerships.
Understanding What’s Behind Agency Pricing
An agency’s fee structure is built on far more than just hourly rates. Most of the cost base comes from people, the creative, strategy, account, and media teams, whose salaries and benefits shape the bulk of what you’re paying for. Added to that are overheads like rent, technology, and operations, plus an agency profit margin that ensures sustainability.
When combined with pass-through expenses such as production, media, or specialist freelancers, the true cost can quickly escalate. Marketing Procurement professionals must therefore look beneath the headline number and understand:
- Talent Mix – Who’s actually working on your business and at what seniority?
- Overhead & Margin – What level of profit is built into the fee?
- Deliverables – Are third-party costs included, or added later?
Without visibility into these components, it’s easy for brands to overpay or misjudge value. Two agencies quoting the same monthly fee can represent completely different resource allocations.
How Agencies Price Their Services
Agencies use several pricing models, each with distinct implications for procurement teams.
- Time and Materials (T&M) models charge by the hour for work completed—ideal for flexibility, but harder to forecast. Fixed-fee or project pricing sets a clear cost for a defined scope, offering predictability but risking extra charges if the scope creeps.
- Retainers create consistency in long-term relationships, but only work when regularly reviewed against actual hours and outputs. Increasingly, some brands are shifting to value-based or performance-linked pricing, where part of the agency’s remuneration depends on outcomes such as ROI or sales lift.
For Procurement, the goal is to select a model that aligns incentives, rewards efficiency, and supports the brand’s commercial goals. Asking your agency about their fee structure can reveal a lot about their transparency and flexibility.
The Real Drivers of Agency Pricing
Agency rates vary enormously usually by geography, discipline, and talent level. A freelance designer might cost $80 an hour, while a senior strategist at a top-tier agency could command 10 times that. Marketing Procurement need to understand the nuances that drive agency rates.
Key factors influencing agency rates include:
Location – Agencies in major markets (e.g., London, New York) carry higher overheads.
Sector complexity – Regulated or high-risk industries demand specialist knowledge.
Scope and scale – Multi-market campaigns cost more than single-channel projects.
Talent seniority – More experienced teams naturally cost more.
Agency structure – Network agencies may charge more than an independent.
Marketing Procurement’s task is to determine whether the above are relevant and reflect genuine value. Benchmarking is the only way to know.
Comparing rates across similar markets, roles, and deliverables allows you to negotiate with confidence.
Transparency: Procurement’s Greatest Leverage
The greatest frustration for many Marketing Procurement teams is opacity. Without clear breakdowns, you can’t tell whether you’re paying for expertise or inefficiency. Agencies sometimes quote “standard hours” rather than actual hours worked, or bundle overheads without explaining what’s included.
To build transparency:
- Request a staffing plan that lists names, roles, and the percentage of time dedicated to your account.
- Ask for overhead and profit margin disclosure. Reasonable margins are fine; hidden ones aren’t.
- Include a clause in your contracts for time reporting and ensure that you regularly carry out agency evaluations.
Transparency doesn’t erode trust; it strengthens it. When Marketing Procurement and agencies share cost data openly, both sides can focus on performance, not suspicion.
How to Benchmark and Compare Agency Pricing
Benchmarking is Marketing Procurement’s most powerful tool for ensuring cost fairness. But not all comparisons are equal, comparing a digital retainer in New York to a campaign project in London is meaningless.
You need to benchmark on a like for like basis. Using RightSpend gives you the data at your fingertips, enabling you to:
- Analyse the gap – Are you paying above or below market?
- Ask why – Higher rates may reflect premium talent; lower rates could signal under-investment.
- Adjust accordingly – Negotiate or restructure where the data shows imbalance.
Benchmarking isn’t about driving prices down, it’s about ensuring that cost, value, and performance stay in equilibrium.
Managing the Process: From RFP to Ongoing Review
Strong agency management begins long before contracts are signed.
During the RFP phase, insist on detailed proposals, hourly rates by role, expected hours per deliverable, and clear distinctions between internal labor and external costs. Once you select an agency partner, negotiate clarity into the contract: scope, deliverables, change-order processes, and review cycles.
Post-engagement, Marketing Procurement should take an active role in tracking performance through agency evaluations. Compare estimated to actual hours. Review staffing levels. Check whether efficiencies achieved through automation or offshore delivery have translated into cost savings.
Procurement’s job doesn’t end when the ink dries, it continues through ongoing agency relationship management and cost benchmarking.
The Future of Agency Pricing
Technology is changing everything. As AI automates parts of creative and production workflows, and as agencies embrace remote or hybrid delivery, cost structures are shifting rapidly. Marketing Procurement needs to understand how these changes affect agency rates.
At the same time, value-based pricing is becoming more feasible as marketing becomes more measurable. When outcomes like conversions or brand lift can be clearly tracked, tying compensation to performance becomes not only possible but logical. It’s certainly a topic that comes up regularly in the industry.
Marketing Procurement professionals who can balance creative value with commercial insight will define the next generation of agency relationships, ones that reward transparency, innovation, and efficiency in equal measure.
Remember…
Managing agency rates isn’t just about reducing cost, it’s about maximising value. By combining transparency, benchmarking, and strategic negotiation, procurement teams can transform agency management from a cost-control exercise into a value-creation discipline.
The best relationships are built on fairness and clarity. When you understand exactly what drives agency pricing, and when your agencies know you value openness as much as creativity, you can achieve the ideal balance…
