In a recent flash poll, 63% of the participating CFOs and COOs said they haven’t decided whether to increase rates for ‘25. Making this decision soon is critical to ensure that ‘25 programming and budgeting incorporates new rates.
Agency leaders know their businesses and client tolerance far better than we ever could, but our data supports an increase:
- Payroll costs are up. Our 2024 Compensation Report won’t be available for another month but our agencies reported awarding merit increases of 4-5% this year.
- Further, clients are demanding more (expensive) senior expertise than ever before and often refuse to pay for it. That shift from the typical pyramid structure is affecting profitability.
- To recruit and retain top talent, firms have expanded their benefits programs, adding more expense and often, lost billings. According to insurance giant AON, health insurance premiums rose 6.4% in 2024; less than half of that increase was typically passed on to employees.
- Today’s effective, integrated PR solutions require a significant investment in technology, especially as our agencies work to legally and ethically operationalize AI tools. Nearly 60% of our firms reported increased technology costs, averaging 24%.
- New workforce challenges and technology usage in our firms are increasing the cost of professional consultants (lawyers, accountants, etc.).
- Firms working on retainers should consider raising the monthly retainer to reflect these added costs and if a client refuses, commit to less activity.