Should I Pay My Digital Marketing Agency Hourly?

Should I Pay My Digital Marketing Agency Hourly?

June 5th, 2024

In the early days of digital marketing—around 1997—hourly billing was the primary way agencies charged for services like websites, SEO programs, and email marketing. Fast-forward to today, some agencies still use this method. But is it the best option for your small business?

Hourly Pricing Model (Pros and Cons)

Hourly pricing charges clients based on the number of hours an agency spends on a project. It’s straightforward and transparent, making it easy for clients and agencies to understand.


Transparency: You pay for the exact amount of work done, which builds trust and clarity.
Flexibility: This option is ideal for projects with unclear scopes or clients needing minor edits or changes to a website or design.
Simple Bookkeeping: It is easy to track and manage hours worked.


Client Pushback: Clients may question the efficiency and time spent on tasks, possibly leading to disputes. Not all work is $150 an hour work.
Profit Limitation: The agency’s profit depends on hours worked, not the value delivered.
Scope Creep: Projects can grow beyond initial estimates, leading to extra unpaid work.

Alternatives to the Hourly Pricing Model

Project-based pricing charges a fixed fee for the entire project. This fee is estimated by considering the required hours and adding a buffer for unexpected costs.


Predictability: You know the total cost upfront, making budgeting easier.
Defined Scope: Clear deliverables and timelines are established, reducing the risk of scope creep.
Potential for Higher Profit: Efficient project management can lead to higher profits if the project finishes under budget.


Inaccurate Estimates: Early cost estimates need to be more accurate, causing potential losses for the agency.
Limited Flexibility: Changes in project scope can be challenging without renegotiating terms.
Risk of Overwork: Agencies may work more hours than initially estimated without extra pay.

Point-based pricing is similar to a monthly retainer but assigns a point value to each service. Clients buy points each month and use them for the services they need.


Flexibility: Adjust services each month based on needs.
Transparency: Clear point allocations make understanding what you’re paying for easy.
Value Focused: Emphasizes the value of deliverables over the time spent on them.


Complexity: Clients must understand the point system and allocate points effectively.
Subjectivity: Point values for each service can be subjective and might need frequent adjustments.
Overemphasis on Tasks: The focus might shift to completing tasks rather than achieving broader business goals.

Which Pricing Model Works Best?

Hourly Pricing: Best for small projects like website edits or large projects with uncertain scopes, such as creating a multifunctional app. It offers flexibility but might lead to disputes over efficiency and time management.
Project-Based Pricing: Ideal for well-defined projects with clear deliverables, such as website development. It provides predictability but can be risky for agencies if initial estimates are inaccurate.
Point-Based Pricing: Suitable for ongoing, retainer-based relationships where flexibility in service allocation is needed. Perfect for comprehensive digital marketing programs requiring SEO, Google Ads, social media, and email marketing to generate leads. It emphasizes value but requires clients to understand and manage the point system effectively.

In short, project pricing is the best option for building a website. A points system or retainer is the best option if you are looking for a monthly lead generation program. An hourly program is the best bet if you need minor edits to a website.

If you want to discuss a potential digital marketing project, please get in touch with Power Marketing for a free consultation.