In PR, does experience beat the hourly rate?

PR Fees

By Bianchi PR, our Public Relations Global Network (PRGN) partner in Detroit

It’s no secret that companies are looking to get maximum value from their PR firms. In that quest for value, some companies give heavy weight in the evaluation process to hourly rates.

This can be a mistake, because hourly rates do not equate to actual value.

Years ago, I was a corporate PR manager. While my company had a PR agency of record, I hired a smaller firm with a higher hourly rate for a special project. And it turned out to be a great value. Why? Because the owner of the smaller firm was able to accomplish in one hour what the lower-rate agency of record couldn’t accomplish in two weeks of solid work.

The difference between the two efforts – other than thousands of dollars in potential cost – was the appropriate industry experience, knowledge, contacts and context.

Many clients have learned the hard way that the agency with the lower hourly rate can often be the more costly agency – because it takes them longer to get the job done … if they can get the job done at all.

Photo Credit: Library of Congress

The principal of that smaller PR firm I mentioned earlier told me a story about the great scientist, Charles Steinmetz, and his encounter at Ford’s Rouge Plant in Dearborn almost 100 years ago.

An electrical genius with more than 200 patents to his name, Steinmetz worked for General Electric for a number of years, where he earned the nickname “the wizard of Schenectady” (GE’s hometown).

Ford was having problems with a giant generator at the plant, and the company’s own electrical engineers couldn’t resolve it no matter what they tried. In desperation, Ford called Steinmetz to the factory to see if the electrical wizard could solve the problem.

Steinmetz asked only for a pencil, paper and a cot, and refused any help from the Ford engineers. After listening to the generator carefully and performing calculations on his notepad for two solid days and nights, Steinmetz arrived at the solution.

He requested a ladder, climbed up it and made a chalk mark on the side of the generator. He told the incredulous Ford engineers to remove the plate that had been marked and to replace 16 windings on the field coil.

The engineers did as instructed and the generator performed perfectly, much to Henry Ford’s delight … until he received an invoice from GE for $10,000. While he conceded Steinmetz’s success, he balked at the cost and asked for an itemized bill.

Steinmetz responded personally to the request as follows:

Making chalk mark on generator $1.

Knowing where to make mark $9,999.

Ford paid the bill. He realized that he wasn’t paying $10,000 for two days of a man’s time … but for the decades of experience and the unique knowledge that enabled Steinmetz to identify and resolve the problem in short order.

Ford paid for the experience that got the desired results … and actually saved money in the process.

Whether this story is true or not, it underscores an important point: When you’re looking at PR agencies, don’t just focus on the lowest hourly rate. Look at the PR firms’:

  • Experience in your market;
  • Knowledge of the trends, issues and players in your industry;
  • The time they invest in keeping up with your industry and market;
  • The relationships they have built with the media and organizations in that sector; and
  • The results they have generated for companies that are similar to yours.

And, most importantly, look at the actual people at the PR firm who will be applying their insight, knowledge and experience on your behalf.

Your best value will be a Steinmetz … the firm with the experienced and knowledgeable people to get the job done correctly, quickly and efficiently.

And that’s true genius!

Have you ever been part of a ‘Steinmetz’ moment in your career? Leave a comment below or tweet us @LandisComm.

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5 Comments

  1. David Landis Reply

    Jim, great blog post. What you’re talking about is value pricing and I think more PR professionals should take that into consideration when pricing their fees. For instance, since we’ve worked in the SF market for more than 25 years, if we can get the Mayor to attend a client event: is that worth 10 minutes of our time or much, much more because of our relationships? Cheers, David

  2. Gregory Bortkiewicz Reply

    Lower rates can be enticing but you get what you pay for! Thanks for the great blog.

  3. Ashley Boarman Reply

    Jim – we’ve been talking about this very topic recently here at LCI. Experience is everything in an industry like PR. The example you shared proves it. Fun read…thanks!

  4. Sarah Mason Reply

    I love the story that illustrates this topic, Jim! Experience is everything in dynamic fields like PR and you will always get what you pay for!

  5. Mike Eller Reply

    I have that same issue in my business. In today’s day and age for my service I often have to respond, ” It didn’t take me a hour to do, it took me 40+ years to get good enough to do that in a hour.” The point being the same. But it is a hard sell.