Billable hours are dead: The demise of the agency/client time trap.

The first decade or so of my career was spent in large, traditional, global agencies, in which I endured a painful week at the end of every month arguing with clients over billable hours. Then I went client-side for the next few years and endured the same painful week at the end of every month arguing with agencies over billable hours!

The following familiar refrains, or similar, will likely echo in the minds of anyone from either side of the client/agency fence:

Agency:

“We’ve overserviced the account and need to cut hours next month to compensate.”

“Yes it really does take us six weeks to write 250 words of copy.”

“We’ve been overservicing your account due to the number of client revisions and need to review the fee.”

Client:

“What have the hours I’m paying you for actually bought me?”

“How have you burned through the year’s billable hours in just 5 months?

“How much!!!???”

The traditional agency model has long relied on the concept of billable hours to measure agency productivity, allocate costs, and calculate client invoices. But much like casinos, the odds are always stacked in favour of the house!

It’s precisely this imbalance and associated frustration that led to the birth of our agency and Early’s All You Can Eat (AYCE) Marketing & Creative proposition.  It’s a paradigm shift from the norm: no timesheets, no clocks a ticking, no invoice shocks, and no month-end arguments.  Just a fair, honest, delivery-led approach that generates stunning creative, results-driven marketing, 100% client satisfaction scores, and peace and love all round.

Let’s let the cat out the bag on the rigid, inflexible agency billable hours system and why it’s at best unfair, at worst downright scandalous, and by extension, totally obsolete.

And then we’ll look at the fairer alternative.

1. Timesheets are fatally flawed!
   The entire concept of recording time is bunkum. It reliably fails to accurately reflect the actual hours spent. So much so, you could set your watch by it!
   
   I’d like to bet you, the last 15 minutes of every Friday afternoon in every agency up and down the land is spent doing timesheets. Teams of individuals rushing as the clock ticks down to the pulling of the first pint of the weekend. Individuals struggling to remember and record the hours they’ve spent on client work since Monday, and then throwing in a load of hooky hours to justify their existence and the client fee. It’s like treading a tightrope, precariously balancing the need for agency profitability with client believability.
   
   Even with so-called ‘real-time’ digital timesheet software, human input is required and intervention is always possible to get the numbers to add up in the agency’s commercial favour.  And believe me, they always will!
   
2. Even if timesheets were accurate (which they rarely are), there are drawbacks to counting hours, because creativity just takes time.
   The billable hours model, once hailed as a reliable way to quantify effort, is showing its limitations in today's dynamic and fast-paced business environment. It tends to reward quantity over quality, units of time over value, promoting an assembly-line mentality where employees are encouraged to bill as many hours as possible, rather than focusing on delivering the best possible outcome.
   
   Creativity requires time. Simple. There I said it.
   
   It’s often thinking time, time in the shower or at the gym. Sometimes at the desk or around a boardroom table. Sometimes alone. Sometimes collaborating or brainstorming with others. And the amount of time needed to come up with that Cannes Lion Award-winning concept is very unpredictable.
   
   Limits on thinking time are often strictly controlled in larger agencies, not because of client deadlines, but purely to hit productivity and profitability metrics, given their organisational overheads. And when the timesheet clock is ticking, creativity and innovation get stifled, the casualties of billable hours as employees are pressured to conform to rigid time constraints rather than nurturing their creative processes.
   
   Demanding an agency team to be creative instantly in the next 2 hours of allocated billable time, is like saying to an off-duty comedian in the supermarket: “Be funny. NOW!”
   
3. “We’re just naturally creative” (…said every agency, especially at the pitch stage.)
   Creative is a process that starts with human thinking. Yes, AI may have an emerging role to play, but machines don’t have the emotion and lived experiences that result in great creative thinking. But, all too often, agencies are either too scared to ask clients, or clients are unprepared to have a line on their budgets called “Thinking time”. After all, as already discussed, we rarely know how much time it will take. As a result, thinking – the most invaluable agency commodity and critical part of the process – is often notoriously loaded into the billable hours system in other, more scurrilous ways.
   
   And in our digital era of instant gratification and competitive climate, agencies pitching for new business will often try to convince clients that their brilliant, natural creative minds can deliver world class ideas at the speed of a TikTok video being posted. They can’t.
   
4. The iteration sponge.
   Creative can take multiple rounds of revision for a client to be truly, and justifiably satisfied. By its very nature, creative is an iterative process. In an agency world awash with billable hours, it actually makes commercial sense for the agency to do as many iterations as possible, rather than getting it right early doors. After all, the client is paying, and iteration soaks up lovely billable hours like a sponge. Revision time provides yet another deep dark corner for agencies to ‘hide’ billable time, to justify fees.
   
5. Billshock.
   In many cases, clients are left feeling frustrated when they receive invoices that are disconnected from the outcomes achieved. The perceived value of those 129 billable hours at £325 per hour, may be seriously at odds with the client’s perspective on the value generated.  This misalignment can erode trust and seriously strain or even destroy client-agency relationships, something I witnessed time and time again in my ‘big agency’ days.

At Early, we don’t have a single timesheet.  Never have.  Never will. (cue choir of singing angels)

We like to think we’ve been around the block enough to know how to price work in ways that are fair, affordable, deliver stunning results for our clients, and still make us a modest margin to continue growing a successful agency, doing world-class work, with clients we love. 

So, at Early, our clients agree a set, fixed fee for a piece of work or, in the case of retainers, a monthly Scope of Work.  After that, the time risk becomes ours, with a firm commitment to adhere to all deadlines. 

Whether it takes 3 hours or 3 days for creative juices to flow, the fee stays the same.  Whether we strike gold with a winning concept on day 1 or with revisions, by day 30, the fee remains the same.  Whether the brief remains intact, or the client tweaks it a few times during the process, the fee remains the same. And we apply this principle across our full-service spectrum of capabilities, from strategy to execution, one-off marketing projects to entire campaign management, and every creative medium and format imaginable. 

Or as we like to call it, All You Can Eat (AYCE) Marketing & Creative.

Our AYCE mindset and the shift from hours to results, fosters a stronger sense of collaboration, partnership and shared success for both parties, and it’s what’s led to senior client testimonials like this from Michael Bayle, VP of Marketing, Product Marketing and Pre-Sales for Cytric Easy, Amadeus’ new business travel innovation with Microsoft:

“The Early team has helped us push our thinking, challenge the status quo and reach into new and engaging creative spaces for Cytric Easy. Early has consistently delivered the level of thinking, creativity and high-quality execution normally expected of larger agencies, but with lightning speed. Our relationship is marked by professionalism and expertise, underpinned by great client service, true collaboration and good humour.”

Michael Bayle, VP of Marketing, Product Marketing and Pre-Sales for Cytric Easy

The era of agency billable hours has to come to an end. If you’re not getting the value you think you deserve from your marketing and creative spend, or you simply want to learn more about Early’s refreshingly honest AYCE Marketing & Creative model, we’d love to have a chat.

Feel free to give us a shout.