How to Budget for PR

If you’re thinking about PR and you’ve gotten this far, you may be getting close to taking the PR plunge. You may have spent a little time brushing up on PR basics and figured out what you need to know before hiring a PR firm. Now, the idea of earned media is starting to make sense.

At this point, it’s likely that you’re starting to think about your company’s budget. How much will hiring a PR firm cost and how do I choose the firm that’s right for me?

Let’s demystify how PR billing works and perhaps you’ll find yourself getting even cozier with the earned media mavens.

How does a PR firm bill its clients?

1. Hourly billing is very common and works much like you would expect: The firm will bill your company a set hourly rate that may be based on either the rate of the account manager(s) assigned to your account, or on the type of work being done – press release writing, thought leadership initiatives, media pitching and so on. Many large PR firms bill hourly because they have enough clients to cover their overhead costs plus profit margin.

2. Retainer billing is when you and your PR firm agree on a set amount per month that you are going to pay for the PR firm’s services. Many smaller boutique PR firms bill on retainer. They take on fewer clients and therefore need to be smart about the clients they work with to ensure they cover all overhead costs plus a decent profit margin.

3. Project billing is just that. The company bills you a set amount per project.

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Which billing method is best for my company?

Each method of billing depends on the needs of the client and the amount of time needed to execute on deliverables.

If hourly billing appeals to your company, be sure to ask specific questions about what constitutes an "hour.” Some firms bill an hour if they pick up your phone call. Some firms bill an hour for any work over 30 minutes and some have solid time-tracking tools that allow the company to bill down to the minute.

A retainer arrangement may work well for you if you need a firm to come to the table with ideas including thought-leadership or even website recommendations. These relationships help ensure that your brand has consistent messaging that resonates with the right audiences and media.

How much should I expect to spend?

The amount you should expect to spend is depends on a few factors, but the most important are:

  • How media-ready your company is,
  • How broad of a media reach you need.

Do you have a stack of byline articles ready to be handed out? Is your website killer? Has your CEO had media training? If so, it’s likely that your PR firm will be able to kick off your relationship quickly and you’ll spend less money up front. On the flip side, if your press kit is out of date (or non-existent), your website is not at its best and your social media has fallen flat, it’s going to take more time and money for your PR firm to get you ready for the public eye.

If you are working with a boutique firm with national press contacts, you should expect to spend around $5,000 per month. A local press consultant may charge only $2,000 while a national firm could be anywhere from $400 per hour to $25,000 per month.

Budget: to disclose or not to disclose

However your company sets up its billing arrangement with its PR firm, you are going to need to tell your PR firm what your budget is up front. Here’s why: PR firms can do a lot for you or they can do smaller, more targeted campaigns. Unless PR firms know your budget, you won’t be provided accurate proposals. If you do not disclose your budget, you could end up on an hourly plan that runs out mid-campaign and loses momentum. Many firms have minimum retainers and a good PR firm understands how to fill that retainer with what you need. If you’re not in a place where you can afford a retainer up front, start a conversation about budget and get the most out of what you have in a way that is a win-win for everyone.

Other costs to consider

Depending upon the stage of your business, your PR firm is likely going to recommend some marketing strategies that you’ll need to plan for outside the PR retainer/budget. The following is a list of miscellaneous costs that may occur during a PR plan:

  • Print collateral
  • Website support (if not already in place)
  • SEO fees
  • Costs to distribute your press release over the wire through wire services like BusinessWire, PR Newswire and Marketwired.
  • Photography
  • Vendor management

All of these allow your PR firm to execute on your PR campaign. They will do the heavy lifting with the media and making the right connections, but you shouldn’t expect them to cover your company’s hard costs. Many firms also charge a mark-up on outside services, so if you’re trying to save yourself some cash, figure out up front what vendor relationships your PR firm needs to manage and which ones you do.

The best way to ensure your PR dollars are spent well is to have frank conversations with your PR firm at the beginning of the relationship and cover the billing basics so you know what to expect and can get the most out of your agency.

Interested in starting the conversation? Contact the Red Fan team; we’d love to hear from you!

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