Digital Agencies : Costs, rates, pricing, risers and fallers

The 2014 Digital Agency Rate Card survey by eConsultancy was released today, it made for some interesting reading on the state of the nation of digital agencies.

By Martin Dower

A couple of points worthy of mention:

  • Less than half the agencies in the UK turnover more than £1m.
  • Most digital agencies are expecting to grow in excess of 30% this year. Yikes!
  • The charges for senior staff have risen 5-10% in the last year to around £1,200 per day.
  • Developers/programmers are progressively earning lower fees, down to around £650 per day
  • Smaller agencies based outside the South-East are up to 30% cheaper.
  • Transparency is on the rise with over 1/2th of all digital agencies now openly publishing their rate card

On the way up

Pretty much any form of strategic skill is commanding a premium but specifically social media, PPC, SEO and content marketing are all showing looking like they will be 10-15% higher at the end of this year versus 2013.

The only area we are seeing an increase is in support, clients have become more savvy of how digital agencies operate support contracts and have cut back on fixed-price contracts and move to more of a pay-as-you go model. Whilst more expensive per hour (typically a 25% premium) these offer the choice of winding-up and down the level of support required.

Overall, the number the support requests per delivery item (currently 0.15) is falling which drives down the internal cost but the cost-to-fix has climbed around 10%. Fewer support issues, high quality.

On the way down

Lots of operational roles are being undermined as cloud-based services, automation and new technology encroaches in the lower-skilled operational space.

Biggest hit is development. We’ve been progressively capping the cost of development over the last few years, our standard development rate is now £695 (down from a high of £895 in 2010) as the cost to hire, train and retain this talent has dropped 30% in the last year or so.

Much of this is down to the end of the scarcity model for digital operations staff, there are now more developers, engineers and designers than demand as the world learns to lightweight code – de-coupling web development from traditional development.

And how about our pricing

Senior staff and strategic roles will remain at £995 per day. Support and development rates will drop from £695 to £595 per day for new contracts and on notice for existing contracts. Partner rates will increase to £1,350 per day in the same notice period.

All pricing subject to VAT.

For reference, average incomes are similar to last year:

  • Digital Services Director £150k
  • Head of digital strategy £80k
  • Project manager, agile £70k
  • Senior online marketing manager £50k
  • WordPress developer (London) £38k
  • WordPress developer (Yorkshire) £30k
  • Web developer (Yorkshire) £32k
  • Web designer £30k
  • Web support £30k
  • Customer services £24k

And for contract rates:

  • social media £29ph
  • web development £26ph
  • digital marketing £15ph

(based on the Guardian Job Survey, 2014. Based on London/South-East unless stated differently)