Costs and pricing
Part of Is a PR agency worth it for a small UK business? Run the arithmetic first
Is a PR agency worth it for a small UK business? Run the arithmetic first
Decide whether a PR agency is worth it for a small UK business: test the retainer against gross margin, set a fixed brief and agree a review date in writing.
What to take away
- A PR agency is worth it when it buys capability you cannot build in-house: media relationships, steady output and a named contact who fields enquiries.
- Run the fee through your gross margin first. On an illustrative 40% margin, a £2,000 monthly retainer costs £24,000 a year and needs around £60,000 of extra sales to break even.
- Your own sales cycle beats any sector benchmark when you set the first review date.
- In year one, a fixed-scope project usually beats an open-ended retainer for a firm with no PR history.
Start with the arithmetic, not the pitch
PR fees are a fixed cost, so they land before any result does. Divide the annual fee by your gross margin and you have the extra revenue the work must influence before the spend pays for itself.
Fee to break-even in four steps
- Take the annual PR fee
- Divide by your gross margin
- Get revenue needed to cover fee
- Test against buyer, price, market
Test that number against your buyer, your price and your market. If 20 extra orders is not plausible in twelve months, the retainer is a poor bet.
What UK size thresholds tell you
Company size has a statutory definition. Under the Companies Act 2006, a company is small if it meets two of three tests. The thresholds were raised for financial years starting on or after 1 January 2016, to £10.2 million turnover, £5.1 million balance sheet total and 50 employees.
UK small company thresholds
- £10.2mturnover
- £5.1mbalance sheet total
- 50employees
- 2 of 3tests to qualify
That band is far wider than most owners asking this question. It shows the label is an accounting test, not a marketing budget.
Federation of Small Businesses member surveys cover trading conditions at the smaller end, and each figure is worth reading with its survey date and sample attached.
A worked example with labelled pound figures
Here is the shape of the sum, with figures you can replace.
A worked example
| Item | Illustrative figure |
|---|---|
| Annual PR fee (12 months at £2,000) | £24,000 |
| Gross margin | 40% |
| Revenue needed to cover the fee | £60,000 |
| Average order value | £3,000 |
| Extra orders needed at that value | 20 |
| Enquiry to order rate | 1 in 5 |
| Extra qualified enquiries needed | 100 |
The 20 extra orders is the number to argue about, not the volume of coverage. The 100 qualified enquiries is where the plan usually breaks, because most small firms have no routine for following them up.
Where SME PR agency cost turns into return
A small business PR service pays where credibility was the reason buyers hesitated, and where a buyer arrives part-convinced before the first call.
It rarely pays through direct attribution. A buyer who reads a trade piece, checks your site and emails three weeks later will not appear in a campaign report as an earned-media lead.
Before you accept a figure, run a cost comparison with an in-house team, because a part-time hire may cover the same brief.
- Name the person who will answer enquiries within one working day, and confirm they have the hours.
- Gather three proof points a journalist can verify, such as a named client, a dated figure or a completed launch.
- Agree a written deliverable list, so the retainer buys outputs rather than availability.
- Check the draft material against the CAP advertising codes before release, because the copy is still your claim.
- Put the review date in the contract instead of reviewing whenever coverage looks thin.
What the contract needs to cover
Fee is only part of the cost. Notice period, ownership of the work and the handling of named contacts all sit in the paperwork. If the agency keeps a media list containing personal data, a written processor agreement is needed, and the ICO guidance sets out what it must contain.
Ask who owns copyright in the assets the agency creates, since it decides what you can reuse after the relationship ends. A review of the contract terms before signing is cheaper than an argument later.
When the answer is no
Walk away when nobody in the business can handle the enquiries the work produces. An unanswered enquiry is worse than a buyer who never saw you.
Walk away from a retainer with no deliverable list, and from any agency that cannot name the sectors it has worked in.
A fixed-scope project is a fairer first test, and it gives you a record to judge before you renew.
Common questions
Is a PR agency worth it for a small business in the UK?
Yes when the fee buys capability you lack and you can service the interest it creates. No when you are buying the idea of publicity rather than a defined job.
How much should an SME set aside for PR?
Rates move with scope, so avoid chasing an average. Put one fixed brief to three agencies and compare the quotes line by line.
Can a small business run PR without an agency?
Yes, using founder time and trade press. The trade-off is hours rather than pounds, and it works best when one person owns the task.
When should the first review happen?
Tie it to your sales cycle rather than the coverage calendar, and agree the date in writing before the work starts.
