Costs and pricing
Part of Budgeting for a branding agency: a worked example and VAT treatment
Comparing branding agency pricing models on one scope and one period
Compare branding agency pricing models in England on one scope, period and cost basis, with blank formulas for projects, time, retainers and licences.
What to take away
- Choose a fixed project fee when scope is settled; choose a day rate only when scope is unresolved and written authority is tight.
- On one fixed case, the project fee and retainer both came to £72,000, the day rate to £64,400 with quantity risk left with the buyer, and the licence to a £40,000 floor plus royalty.
- A retainer buys reserved monthly capacity, not guaranteed outputs or named people.
- A licence buys rights of use, not creation.
- Pick the risk allocation you can govern and fund, not the smallest unqualified total.
Fix one case before comparing prices
Define one brief with the same research, decisions, assets, variants and review rounds. Add the same rights, handover and acceptance tests, one start date, one end date and one payment calendar.
Use total pounds sterling, excluding recoverable VAT, as the economic basis, and record gross cash paid by month beside it. The budget template with its VAT field uses the same cost lines.
comparable cost = fixed charges + variable units × contracted unit price + buyer labour + third-party rights + implementation + change + exit
Every input needs a source, unit, period and confidence level. If an offer omits a required item, add a sourced buyer-side provision or leave the total incomplete.
Comparable Cost Formula Inputs
- fixed chargesbase fee
- variable units × unit priceusage
- buyer labourinternal time
- third-party rightslicences
- implementationsetup
- changevariations
- exittermination
Example: four models on one fixed case
The case is one identity programme over four calendar months: 80 agency days, three acceptance phases and the same 12-month rights. No supplier quotes were collected. Every rate below is an illustrative buyer input dated 5 September 2026, not a market benchmark.
Four models on one fixed case
Illustrative inputs
- Fixed project fee
- £72,000 for the defined scope, phased 30/40/30
- Day rate
- 80 days plus 12 change days at £700
- Retainer
- £18,000 a month for four months of stated capacity
- Licence
- £40,000 asset fee plus 5% of net sales, £25,000 minimum guarantee
Fixed-case cost
- Fixed project fee
- £72,000
- Day rate
- £64,400
- Retainer
- £72,000
- Licence
- £40,000 floor; £65,000 at £500,000 net sales
What stays open
- Fixed project fee
- change units above scope; acceptance evidence
- Day rate
- effort may rise; buyer carries quantity risk
- Retainer
- unused capacity expires; outputs not guaranteed
- Licence
- sales, territory, media and term
Buyer-side project management is excluded because it is identical across all four models and cancels out. Only the day rate is cheaper on these figures, and that saving is the buyer's quantity risk showing up as a lower price.
Pricing Models: Units and Acceptance
Model
- fixed project
- accepted scope
- time & materials
- hour or day
- retainer
- month of capacity
- licence
- asset, use, territory
- contingent/hybrid
- verified outcome
Charging unit
- fixed project
- approved change units
- time & materials
- authorised time
- retainer
- months + excess
- licence
- licensed uses
- contingent/hybrid
- eligible outcomes
Volume input
- fixed project
- evidence closes phase?
- time & materials
- who approves extra?
- retainer
- unused capacity expire?
- licence
- use expands or ends?
- contingent/hybrid
- who verifies event?
Acceptance question
- fixed project
- time & materials
- retainer
- licence
- contingent/hybrid
Compare named providers by charging unit
The ranges below are indicative published or market figures seen by 5 September 2026, not quotes collected for this comparison.
| Model | Named providers | Indicative basis |
|---|---|---|
| Fixed project | Pentagram, Koto and Johnson Banks (London) | Per project after a defined brief; identities from around £25,000 to £150,000 |
| Day rate | Accenture Song and Deloitte Digital (London); freelancers via YunoJuno | Daily billing; YunoJuno published data puts London brand and design freelancers at £350 to £700 a day |
| Retainer | Landor & Fitch, Design Bridge and Partners and Interbrand (London) | Monthly capacity retainers, typically £5,000 to £30,000 a month |
| Licence | Beanstalk and LMCA (London offices) | Royalty on net sales, typically 3% to 10%, often with a minimum guarantee |
| Contingent or hybrid | 99designs by Vista, DesignCrowd and Fiverr Pro | Published package price paid after acceptance; entry logo packages from under £100 to around £1,000 |
Wolff Olins, SomeOne and Ragged Edge also quote project fees from London. The table shows charging units, not quality.
What each model leaves open
A fixed fee gives price certainty only while scope, dependencies and acceptance stay fixed. Time charging moves quantity risk to the buyer, which can suit unresolved work when approval authority is tight.
A retainer reserves stated capacity. It does not promise that the right people or outputs will be available in the month you need them.
A licence needs a rights schedule covering ownership, media, territory and duration. The IPO's copyright ownership guidance explains that commissioned work is generally first owned by the creator unless the parties agree otherwise in writing.
A contingent fee needs an outcome definition, an eligible population, a named data owner, an attribution rule and a reversal policy. Payment attribution clauses are contract mechanisms, not evidence of cause.
Normalise VAT and payment timing
Show net, tax and gross figures separately. HMRC's VAT charging guidance covers the calculation, and liability or recovery is a question for qualified advice. Never compare a VAT-inclusive quote with a net one.
Cash exposure depends on deposits, milestone validation and client receipts. The statutory route for qualifying late debts sits in the late commercial payment guidance. Whether it applies turns on the contract and the facts, so record due dates and disputes.
Choose the model that fits your scope certainty
- Fix scope, dates, rights and acceptance tests once, then reuse them for every offer.
- Convert each offer into the fixed-case cost in pounds sterling, keeping the gross-cash column.
- Drop any model with missing rights, tax, legal or cash-flow evidence.
- Reject options whose risk you cannot govern or fund, whatever the headline total.
If scope is settled, the fixed project fee is usually cleanest. If it is genuinely unresolved, take the day rate with a written change threshold. How project, retainer and embedded agency models differ sets out which party controls the work in each case.
Common questions
Which pricing model should a buyer choose?
If scope is settled and acceptance is written, a fixed project fee gives the most predictable cost. If scope is truly unresolved, a day rate with an authority limit is more honest than a padded fixed fee.
Why can a retainer not be compared directly with a project fee?
A retainer month is a month of stated capacity, not a whole project, so the units differ. Convert both into the fixed-case cost and keep the underlying unit visible.
What must a contingent fee contract define?
It needs an outcome definition, an eligible population, a data owner, an attribution rule and a reversal policy. Payment attribution is a contract mechanism, not proof of cause.
