While it is certainly fair for a marketing firm to make money, it’s unfair to you if gross profit levels are above market rates for similar expertise and services. Actually, there is no reason to pay retail rates for expertise and production with a properly crafted Engagement Agreement.

• Watch Out When Paying “Employee Retail Prices”. Does the media firm use employees or independent contractors? If the firm uses employees to do your design work, what is the billable rate per hour for each seated employee who is performing work? You don’t want to pay “partner” prices for work that is actually performed by junior associates.
• What’s the Mark-Up? Does the media firm mark-up production costs? In other words, if the printer charges $10,000 to print collateral pieces, is a hidden fee of 17.65% markup added to the printer invoice to “handle” the printing?
• Set Fees or Not? Will the media firm quote you a set production fee, regardless of how long it takes to complete the project?
• Beware of the Project Management Fee (or a host of other names it is either called or “buried” into the proposal). What is the project management fee arrangement that the firm earns when employing outside contractors to help produce your media? Is it a markup on the outside contractor’s work plus a time-fee for the media company’s involvement? Or just a time fee with the outside contractor’s markup hidden? Or just a fair time fee?
• Who Are the Extras in Video Production? Often times, a director can double as a sound person, saving you another $100-$150 per hour for every hour your shoot is occurring.
• Are You Paying for a Custom Website or a Template Website? Some companies charge big bucks for what appears to be custom work but in reality you are sold a template that is used in a variety of sites but at a premium price. There is nothing wrong with a template design; just know what you are paying for.
• Is There a Ghost Performing the Work? Is your project actually being substantially completed by another company with the originating company (your media firm) serving in effect as only a broker? Again, it’s important to know who is doing your work so that you do not overpay.
• Kickbacks. Vendors often times offer marketing companies a number of free goods and services when business is placed. Trips, merchandise, or other perks can be awarded based on volume placed. Your volume may be added to other clients’ volume to enable the marketing company to receive perks you're not being told about. Be sure that your contract states that your marketing company will advise you of any goods or services offered to the marketing company in exchange for placing your business with a particular vendor.
• Business Background of the Principals. What are the specific sales accomplishments that the marketing principals have in their personal resumes? Have they ever worked on a straight-commission basis?
• Is the Marketing Firm Buying Vendor Services at “Agency Prices” or at “Local-Direct” Prices? You must be careful that the prices you are paying for outside vendors is what you or a sharp negotiator would pay on a “local-direct” basis with no middleman markup. Often times, vendors offer two prices: one to marketing firms and a lower price to individuals.