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HOW AND HOW MUCH WE CHARGE?
Most of our clients will work with us on a retainer basis and sign a retainer
agreement requiring a 3 months advance payment. Clients who request new
web development will be required to pay 50% of Quotation on order and the
remainder of the balance prior to delivery.
PWEMA is extremely transparent with its billing system and uses an interna-
tionally recognized formula for billing the creative time as per specific job
functions. The formula is:
Billable Hourly Rate = (Hourly Rate Paid to Employee) x (Company Overhead
Costs of 1.7 to 2.4) x (Additional 20% Profit Margin)
For example, if PWEMA pays a Flash Animator $9 per hour, then the addi-
tional costs associated with internet, phones, utilities, social security, taxes,
legal, accounting, office expenses, and all non-billed personnel as well as all
other miscellaneous expenses is multiplied at the rate of 1.7 to 2.4, then we
add a profit margin of 20% as we hope that our company makes money not
being a charitable foundation. So the billable rate for the flash animator
becomes $9 x (1.7 to 2.4) x 1.2 = $18.35 to $26. The 2.4 rate applies when
PWEMA's full time staff is less than 10 persons and the 1.7 rate applies
when PWEMA's full time staff is over 25 (this is obvious as with more people
the overhead costs are spread over a larger group of employees and this will
drive the final cost down.
Our current rates for a specific job function along with USA, GCC, and Beirut
rate comparisons are as follows:
PWEMA's 2008 BILLABLE HOURLY RATES in US$ & Comparison Chart:
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HOW IS THE PWEMA RETAINER MANAGED?
Based on an initial evaluation of the client's requirements for site updates
and maintenance, PWEMA discusses and assigns an initial 12 months
retainer with the client, with each 3 months pre-paid in advance. When
actual update and maintenance requests are being performed PWEMA will
keep track of hours and resources used, if the 3 months ending billing cycle
shows actual work billings are within the 15% plus or minus margin from the
original retainer agreement, then the retainer remains the same. If the
retainer goes below or above the 15% margin then as long as the actual
billings do not go below 50% of the actual monthly retainer agreement, then
balance will be either paid by the client or credited depending on the actual
amounts. In all cases, PWEMA must assign a human resource to be ready to
service the client when requested, therefore in periods where the client
request updates or maintenance work below 50% of the monthly retainer
amount, then client agrees to forfeit 50% of the Retainer as the resource
was still maintained and paid for by PWEMA to better service the client.
PWEMA's "MAMA" Billing System for Non-Retainer Projects.
The PWEMA billing system is a very unique billing system that rewards
good clients for being responsive, organized, decisive, and provides clear and
concise communications. The PWEMA billing system is based on a MAMA
system by which, upon job completion, PWEMA bills the client the Minimum
of the Approved Max Estimate and the Actual hours worked as long as the
Job's Actual do not exceed 20% the Max Estimate. All out-of-pocket
expenses such as travel expenses, stock photography rights purchases,
courier services, printed proofs and other out-of-pocket expenses are all
billed separately.
WHY MAMA?
We are not created equal. We all know that some clients are easier to deal
with than others. So how should PWEMA bill its clients?
In order to maintain the highest ethical system of billing, PWEMA reviewed
existing systems typically used by creative agencies and decided that
instead of creating a standard fee system for any specific creative service,
the MAMA system rewards those who must be rewarded.
Most companies realize that with a standard system, some clients are
considered good clients, and as a result, the agency will make good money
from them, with other clients potentially being unreasonable positioning the
agency to lose money with them. However, in the end, it all averages out
and the company hopes to still make money by creating enough buffer zone.
PWEMA does not believe that such a standard billing system is fair to those
"good" clients. Shouldn’t a good client be rewarded for being "good"? Why
this good client should be penalized because of another "difficult" clients.
Such is the spirit of the MAMA billing system.
MAMA "MINIMUM OF APPROVED MAX AND ACTUAL" TERMS: 1. Approved Max Estimate means the client approved maximum potential
amount that the client might end-up paying for the Job in the event that
the actual amount reaches or surpasses the Max Estimate by less than
20%.
2. Actual means the actual costs based on the rates associated with a
resource job function and the total actual hours worked by all the required
resources.
3. Minimum is the minimum amount of (1) Approved Max and (2) Actual
that the client pays at the end of the job or project.
HOW DOES MAMA WORK?
After completion of the Job Creative Brief (JCB) or the Creative Work Plan
(CWP) by the Client, PWEMA creates a Max Estimate for the job or the
project. The client approves this Max Estimates and pays a 50% deposit
prior to starting the job. As the work progresses, the client will be made
aware of the actual costs being incurred. At the end, the actual hours
worked are tabulated and the final billing becomes the lower of the Max
Estimate or the Actual, unless Actual is more than 20% over the Max
Estimate, then the Client pays the Max Estimate plus any amounts over that
additional 20%.
Examples:
Client A: Max Estimated of 8 page web site production came at US $750, the
client was very clear and responsive and knew that within budget he still
could request more options, at the end, the client approved the final website
and the final actual costs were $454, the Client was billed only $454.
Client B: Max Estimated of 8 page web site production came at US $750, the
client was indecisive and would change his mind and request more changes
and after he/she approved certain options then he changed his mind and
requested a whole different direction. When he/she was made aware that
the actual costs now reached $970, he/she knew that although it surpassed
the limit he/she would only pay $750 plus the amount over the additional
20% (in this case $70 additional), in this case PWEMA has lost all of its 20%
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