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Should In-House Creative Teams be Charging Back Their Services?

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Many WorkflowMax creative clients don’t actually operate their own agency - they are a team within a larger company, providing creative services to other parts of the company on a project basis. These teams operate in much the same way as an external agency,

If you are managing an in-house creative team, do you charge back the cost of each job to the “client” (the department that requested it) or do you work “free”? There are benefits and drawbacks to both models, but the majority of in-house teams do not chargeback, believing it adds unnecessary admin time. But is that the real story? Could your in-house team benefit from a chargeback model? Let’s find out:

The Stats on In-House Chargeback

Recently, the Cella In-House Creatives Report 2014 was released, which is an annual report compiling data from 462 in-house creative teams about their departments. One of the questions asked refers to chargeback. Of the surveyed creative departments, 68% do not chargeback, 20% chargeback and 12% chargeback only for specific clients and/or services. The larger a creative services team, the more likely they are to chargeback (80% of departments with more than 50 team members charge back).

Of the companies that operate a chargeback model, most (76%) operate subsidized chargeback, while 22% require full-cost recovery and 2% have a requirement to turn a profit.

Those who aren’t charging back like their systems because there’s no financial pressure and minimal reporting requirements. They can quickly add freelancers or temps to the team when the workload requires it, and the lack of direct costs means they’re always busy. But do these benefits outweight those of having a chargeback system? I’m not so sure:

Benefits of Charging Back to In-House Clients

Take a look at some of the benefits of operating a chargeback system:

  • If you’re charging back, you’re required to carefully track and measure your projects, so that you can provide an accurate invoice. This means you’ll be tracking the progress of jobs and gaining valuable metrics. You can use these metrics to improve the efficiency of your department or adapt your services.
  • Charging back time promotes efficient use of time throughout your whole department. You’ll improve productivity by understanding where your time goes and how long a job actually takes (this is always different from how long you think it takes).
  • Your department can provide more balanced creative support. if you’re tracking your jobs, you can see when one client is hogging all your time, and allow other departments to take priority for a little while.
  • Your company can measure value. By comparing your services and prices with those of an external agency, your whole company can understand the value your team provides. This helps improve working relationships and allows you to make a positive impact on company culture. (Let’s hope this doesn’t end up with the company employing the external agency!)
  • Your clients will better be able to recognise the value of your creative services. How often do members of your creative team moan about other departments underestimating the amount of work that goes into a project? How many “But could you just do do this quick edit and make that bit blue and redo the entire thing in 30 minutes?” emails do you get every week? Putting a dollar value on your team’s time helps other departments to value what you do.
  • Clients aren’t as likely to misuse your department. With a cost for services, your department isn’t as likely to be taken advantage of by others in the company looking to hand off work they could do themselves or giving you work with questionable impact or value.

Main Drawbacks of a Chargeback System ... And How to Overcome Them

Of course, there are some drawbacks to a chargeback system, and it doesn’t work for all in-house creative teams. The main issues to overcome are:

  • Clients find cheap or free alternatives to avoid the charge for creative services. This is more a problem of company culture than the chargeback system. It’s important that all departments understand the value the creative team can give to projects, and that they need to be the go-to source for any creative requirements. Work on ways you can educate other departments about what you can do, and why you do it better than cheap alternatives.
  • The chargeback system creates a vendor / client relationship, instead of a collaborative atmosphere. I can understand why this would seem damaging to many companies, but it’s not necessarily a bad thing. Collaboration on creative with other departments can often be fraught with dangers - for one thing, they love things like comic sans font and scrolling headlines and things like that. Secondly, extensive collaboration can take up hours of valuable time for both departments. Build collaborative processes into your workflow - going over proofs together and incorporating changes, etc, but don’t get so bogged down with working together you forget to actually produce any work.
  • The system for administering chargeback costs too much money and takes up too much time. To that, I would ask, are you using WorkflowMax? Because if so, you’ll probably find it saves you both.

When you weigh the options, a chargeback system is definitely looking like a good idea. It helps the team to stay focused, and ensures the client department is given valuable metrics and precise numbers for their balance sheets. Chargeback means your team feels valued, and the projects you undertake are more well-balanced and strategic. So what are you waiting for? Is it time to start charging out your in-house services?

Image courtesy of Tom Fishburne.

 

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