The High Cost Of Putting Creativity On The Clock
If it feels like breakthrough creative work is getting rarer, you're not imagining it. The spark that redefines a brand or disrupts a category has dimmed. Not because of AI. Not because of short attention spans. It's because, somewhere along the way, we stopped paying for value and started pricing creativity like it's a task on a checklist. Now, agencies are scrambling to prove their productivity instead of chasing their best ideas through the creative alchemy of experience, instinct, insight and bold thinking.
In the absence of commissions, most agencies defaulted to hourly billing—a model rooted in the Industrial Age, when factory lines equated hours with value. It created a pressure to constantly perform and justify every hour. I've watched senior strategists with 30 years of pattern recognition solve problems in minutes, but under an hourly model, that kind of talent and expertise is penalized. Less time means less billable value. Imagine hiring an architect to design your dream home, then telling them they're only worth what they can sketch in an hour. That's the reality creative agencies live in every day.
Writer and entrepreneur Alan Philips suggests we're in 'the Age of Ideas,' where creativity and innovative ideas are crucial for generating value and achieving success. But these things don't run on a schedule, and we need to stop pricing our services like they do.
Performance-based models sound ideal: shared risk, shared reward. When structured well, they align agency and client goals and drive measurable outcomes. This pricing approach is especially effective for campaigns with clear KPIs and short sales cycles. But when misapplied to brand-building work or when the metrics are too narrow, they become a trap.
Performance-based models undervalue creative thinking and create misaligned incentives that can erode trust on both sides. For example, at VI Marketing and Branding, we've encountered situations where clients agreed to terms and benefited from our work, then refused to pay. When performance criteria are unclear or loosely defined, it can create loopholes that expose agencies to financial risk despite their expertise and effort.
In theory, performance-based pricing are also beneficial for incentivization because they tie compensation directly to outcomes. The better the results, the greater the reward. This structure motivates teams to focus on what drives measurable success and gives clients confidence that their investment is tied to performance, not just effort. But in reality, it only works when the agency can control the full customer journey—from lead generation to conversion. Without shared accountability and data transparency, performance-based pricing is a gamble. And it's what can devastate a small agency.
Value-based pricing is a financial structure that rewards the true worth of a delivered outcome rather than time spent. With it, agencies clearly define and communicate their unique value proposition to build trust and justify their fees up front. The model reflects the depth of strategic thinking, the strength of proprietary processes and the power of experience by aligning compensation directly with impact. This honors the intellectual property embedded in every brief, the years of expertise behind every recommendation and the insights gained from dozens of past campaigns.
However, value-based pricing isn't without challenges. It requires precise measurement of success metrics and strong client-agency collaboration. The model can be hard to scale or standardize, particularly for agencies with diverse service offerings, and there's the risk that comes with uncontrollable external factors hindering outcomes. Additionally, established agencies transitioning from hourly or retainer models must reshape client expectations and update internal processes to focus on outcomes rather than effort. Beyond The Billable Hour
In creative fields, hourly billing isn't just outdated. It's a destructive model that treats seasoned experts like interchangeable cogs. As private equity consolidates agencies and packages ideas into templated service lines, the industry risks losing its originality. Strategy gets collapsed into execution, bold thinking is scoped out and the creativity that once made this business remarkable is sold off by the hour.
Value-based pricing looks beyond inputs and offers a way to preserve and reward originality. Because in the age of AI, creativity is the one thing that can't be automated, templatized or timed to the minute. The way forward requires honoring the experience and intellectual property of the people behind the work. When creativity has the space it needs, it doesn't just solve problems. It reshapes categories, builds unforgettable brands and changes the way we see ourselves and the world.
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