NMK Rate Card Survey, Summer 2002

Report by Richard Naylor, Monday 14 October 2002

Across the interactive media industry, one of the most important and most sought-after areas of knowledge is information about �charge-out� rates. That is, the market price of a range of skills involved in the planning, production, design and implementation of interactive work. Clients need to know the �going rate� when buying interactive services. Equally, agencies and other suppliers of interactive services need knowledge of the market to inform their own pricing strategies.

In established or �mature� markets and industries, such knowledge about the costs of particular products and services circulates relatively freely across the range of buyers and sellers. In the television industry, for example, there are well-established approximate benchmarks for what an Avid editor costs per day, or for what half an hour of a studio-based sitcom will cost.

In interactive media, however, there are no widely shared understandings about prices and costs. The industry lacks the kind of long development history in which norms and benchmarks regarding pricing become established over time. Further, individual entrepreneurs and businesses are often reluctant to divulge their own charge-out rates, for fear of giving an advantage to their competitors. And yet, ready access to price information is key to the effective functioning of a market.

It is this lack of knowledge regarding the market price of particular interactive skills that the NMK Rate Card Survey has been designed to address. By allowing the industry to deal with the issue of sensitive market information as an industry, rather than just a collection of individual enterprises, the Survey will promote more transparent and professional practices in the area of pricing. In turn, this will help to grow the industry on a more stable and sustained basis in the future.

NMK intends to run the Rate Card Survey bi-annually to establish credible benchmarks for the industry, and to track and reflect upon its development over time.

Thanks to ISBA (www.isba.org.uk) for supporting this survey.

Job Roles of Respondents

The Survey was conducted between August and September 2002. There were 255 responses, the large majority of which (83%) were drawn from individuals working principally in the production and implementation of interactive products and services. Commissioners of interactive services accounted for just fewer than ten percent of the sample; with the remainder drawn from a diverse field that includes consultants, trade journalists, and business support specialists.

Chargeable Day Rates for Interactive Media

The Survey identified 14 specific roles involved in the planning, production, design and implementation of interactive media, and asked respondents to estimate what they believe to be the current chargeable day rate for each role.

Click Here to view Table 1: Chargeable Day Rates for Interactive Media

Unsurprisingly, rates for a Director/Senior Consultant are the highest. The three most commonly identified price brackets in the survey indicate typical day rates for Directors and Senior Consultants of between £800-£1,200, with a small emphasis towards the higher end of this price bracket.

It is interesting to note that even at this top end of the scale, current day rates are significantly lower than during the new media/dot com bubble of the late 1990s. Although there is no comparable data relating to the period, anecdotal evidence would suggest that in the over-heated marketplace of the boom, it was not uncommon for charge-out rates to exceed twice today�s levels. It seems clear that the market adjustment and the wider economic downturn have resulted in considerable downward pressure on day rates across the industry.

The survey results also reveal that, in terms of particular inputs into the overall development and production process, no single input is valued at a premium. The differentials that exist between the most common charge-out rates are determined by the perceived level of experience and expertise of the individual (Senior, Middleweight, Junior), rather than by the nature of their function or skillset (Creative, Technology, or Management).

At the bottom end of the cost scale, the three most commonly identified price brackets indicate that typical day rates for the junior roles within the industry start at £250 or less, and rise through to £400. The results also demonstrate that in this instance, day rates for all the junior job roles are much more likely to be priced at the lower end of this range, as almost one in three respondents chose the lower cost bracket (=/<£250) for each of the junior roles within the survey.

However, the most important aspect of the survey results in terms of the junior roles is that respondents have a much clearer shared understanding of their day rate costs. This is better illustrated in Table 2 below, which aggregates the three most commonly stated rates for each of the job roles, and expresses these as a percentage of the total response for each category.

When measured in this way, agreement as to what is the market rate for each role increases as the seniority decreases. So, for the role of Junior Designer/Creative, more than 70% of all responses fall within the three most frequently identified cost brackets (out of 13 possible response options). On the contrary, all of the senior roles fall below 50% in terms of this rough measure of �consensus�.

The industry, then, is beginning to develop a broad agreement on what is the cost and value of the junior functions within the industry, but this is not the case for the senior roles. As to why this might be, one possible explanation is that the variation across the industry, in terms of the size and specialism of companies and the professional expertise of employees, has a greater impact at a more senior level, leading to a genuine variation in skillsets. Whereas it seems that, put bluntly, a junior is still a junior wherever and however they are working.

(1 - The figure for Media Buyer/Planner is particularly low, but the key reason for this is the high numbers of respondents (41%) who were unable to gauge the cost of this job role (see Table 1). A plausible explanation for this lack of knowledge is both the specialist nature of media buying and planning, and the bias in the respondents� backgrounds towards production rather than the commissioning of interactive media.)

Looking Forwards

Respondents were asked about their expectations regarding the likely change in chargeable day rates over the next six months.

As can be seen in Chart 1 below, the majority predict a flat market in the immediate future, with 63% expecting no real change in rates, either upwards or downwards. However, almost a quarter of respondents (23%) expect to see an �incremental� increase in rates. As this number is noticeably more than those predicting an incremental decrease in rates (14%), the overall picture for the industry appears to be muted, but with some indication of cautious optimism. It will be interesting to see how these expectations match with reality over the next six months.

Many thanks to all those who took part in this survey and we hope that you will contribute to the next NMK Rate Card Survey in January/February 2003. Thanks, too, to ISBA for their support with this survey.

Chart 1. Expectations of Chargeable Day Rate Change for Interactive Media over the Next 6 Month Trading Period (summer 2002)

Thanks to ISBA for supporting this survey: www.isba.org.uk

Download the Survey Results

Click Here to download a summary of NMK�s Rate Card Survey, Summer 2002 (PDF, 46K)