Costing/Pricing for Design
Costing/Pricing for Design
Out of context: Reply #2
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- boobs0
In the advertising world, traditionally, the agency made it's money on the "agency discount." This was the 15% discount media outlets, like TV stations and magazines, would give on advertising rates. So, for instance, if you made ads for a client who bought $100,000 worth of space in a magazine, you would get that for $85,000. Out of this you would pay all the production costs of making the ad, and any left over would be profit.
So, when you see the term "billings" for an agency, if they are billing $100 million per year, they are running a business that is netting about $15 million per year.
This traditional model has undergone a lot of change in recent years, but it's the basic deal that the business is founded on.
- in 2004 I worked for firms with this model... afterwards not so muchvaxorcist