Creative Agency Account Manager Podcast Why time-based pricing doesn’t work for agencies, with Tim Williams
Jul 9, 2024
Tim Williams, Founding Partner of Ignition Consulting Group, discusses why time-based pricing doesn't work for agencies, the influence of generative AI on pricing strategies, and key steps to transition to premium pricing. The conversation highlights the importance of modernizing pricing strategies to capture the value of services in a changing market.
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How The Billable Hour Began
- The billable hour began as an attorney time-tracking idea and later migrated to agencies in the 1980s.
- David Ogilvy switched Shell to hourly during a crisis and later regretted the industry-wide shift.
Time Billing Misaligns Economic Incentives
- Clients buy solutions to business problems, not agency time or effort.
- Billing hours creates opposing incentives and erodes trust between agencies and clients.
Politely Disrupt Procurement Conversations
- Change the conversation early and politely disrupt procurement's hour-focused process.
- Signal that you sell solutions and propose a better way to be paid for outcomes.