Costs and pricing
Part of How to build a paid-social budget from dated evidence, not benchmarks
Costing a paid-social agency project: nine cost areas, VAT at 20% and a worked example
Cost an England paid-social agency project from setup to exit: nine cost areas, blank evidence-led inputs, VAT at 20% and a worked example with payment terms.
What to take away
- No single England-wide agency price answers a project-specific buying question. Costing a paid-social agency project from setup to exit means building the estimate from the actual work, not from a market rate.
- Leave every money line blank until a dated quote or approved internal record exists.
- Cost the whole job across nine areas, from discovery to exit.
- Add VAT at 20% on standard-rated services, and show it separately from the net price.
- Check the payment date in the contractfor business transactions it must usually be within 60 days.
Describe every input before adding it
For each monetary line, record original currency, VAT status, unit, quantity and period. Also capture the source and quote date, expiry, product or edition, inclusions and exclusions. Record the owner and confidence, and keep gross cash, recoverable VAT and economic cost in separate columns. The budget template gives a layout.
Input fields to capture
- Original currency and VAT status
- Unit, quantity and period
- Source or quote date and expiry
- Product or edition and inclusions
- Exclusions, owner and confidence
- Gross cash, recoverable VAT, economic cost
You usually charge the standard rate of VAT, currently 20%, on most goods and services. The GOV.UK VAT guide adds that invoices must include your VAT number and display the VAT separately. To get a VAT-inclusive price, multiply the price excluding VAT by 1.2.
Reverse charge, exempt media and platform credits need a tax reviewer. A qualified adviser must decide the buyer's treatment.
Do not translate a day rate into a project total without the approved number of days. Do not call a platform credit a saving unless the contract confirms eligibility, expiry and accounting treatment. Media paid directly by the client should still appear in the whole-project register.
Cost the complete job
Use a separate row for each of these nine areas, and leave the amount blank until evidence arrives.
Cost areas for the job
- Discovery, audience, claims, measurement
- Account setup, permissions, billing, recovery
- Concept, copy, design, production, licensing
- Platform media, charges, credits, refunds
- Tracking, data quality, reconciliation, reporting
- Privacy, PECR, advertising, contract review
- Security assurance, incident prep, accessibility testing
- Routine operation, meetings, training, leave cover
- Discovery, audience definition, claim inventory and measurement design.
- Client-owned account setup, permissions, billing and recovery.
- Concept, copy, design, production, licensing, formats, captions and revisions.
- Platform media, charges, credits and refunds.
- Tracking assessment, data quality, reconciliation, analysis and reporting.
- Privacy, PECR, data protection, advertising, regulated-product and contract review.
- Security assurance, incident preparation and accessible user testing.
- Routine operation, meetings, training, leave cover and change requests.
- Correction, withdrawal, renewal, export, deletion and exit.
Media spend is driven by audience size, auction competition and placement. Creative cost is driven by format count and revision rounds. Control cost is driven by data volume and regulated status. The article on hidden costs lists items a first quote often omits.
Worked example with invented inputs
The figures below are invented to show the arithmetic. They are not market rates. Replace each one with a dated quote.
| Row | Basis | Net cost |
|---|---|---|
| Discovery and measurement design | 5 days at £800 | £4,000 |
| Account setup and permissions | fixed | £1,000 |
| Creative | 6 static assets at £300 plus 2 short videos at £2,000 | £5,800 |
| Tracking and reporting | audit £1,500 plus 3 months at £900 | £4,200 |
| Privacy and advertising review | fixed | £1,500 |
| Exit and handover | 2 days at £800 | £1,600 |
| Fees subtotal | £18,100 |
- Contingency10 per cent of £18,100 is £1,810, set against a named risk and owner. Fees plus contingency are £19,910 before VAT.
- VAT£19,910 multiplied by 1.2 is £23,892, of which £3,982 is VAT.
- Media£6,000 paid directly by the client is added as a separate row, with its VAT treatment taken from the platform invoice.
- Whole-project cash£23,892 plus £6,000 is £29,892.
If the buyer can reclaim VAT, the economic cost is lower than the cash outlay. Keep the two in separate columns.
Keep the worksheet blank until evidence arrives
Use this calculation for each row: line cash equals quoted unit price multiplied by approved quantity multiplied by approved periods, plus stated pass-through charges and applicable VAT. Then total the evidenced lines across setup, delivery, media, controls, operation, correction, renewal, exit and contingency.
Set contingency by risk, not by rounding. It needs its own method and owner, and it cannot hide omitted work. Mark each amount as quote, contract, invoice, internal record, scenario or unknown.
Challenge the quote before approval
Take one ordinary campaign brief and ask the agency to mark every included task against it. Check whether research, each creative format, approval rounds, trafficking, monitoring, reporting, meetings and corrections have named quantities.
Ask who pays for rejected work, platform suspension, emergency withdrawal and extra accessibility remediation. Record the answers in the service schedule, not only in meeting notes. Reconcile the quote total independently from its units, then compare the first invoice with the same identifiers.
Reconcile scope and payment
Read the service schedule beside the pricing mechanism. The pricing models article shows how fees, retainers and percentage models change what a quote includes. Confirm who pays media, how changes are approved, whether commissions or rebates exist and what triggers overage.
Payment terms are regulated. According to the late commercial payments guidance, an agreed payment date for business transactions must usually be within 60 days, and a longer period must be fair to both businesses. If no date is agreed, payment is late 30 days after the invoice or the delivery, whichever is later.
Approve only when finance can trace each amount and specialist reviewers have cleared advertising, privacy, security and accessibility gates. The final cost is a controlled estimate for one scope and period, not a market benchmark.
Before you act
- Capture currency, VAT status, unit, quantity, period and source for each line.
- Keep gross cash, recoverable VAT and economic cost in separate columns.
- Do not convert a day rate without the approved number of days.
- Include client-paid media in the whole-project register.
- Give contingency its own method and owner.
- Reconcile the first invoice before payment and reforecast if scope changed.
Common questions
What details must each monetary line record?
Capture original currency, VAT status, unit, quantity, period, source or quote date, expiry, product or edition, inclusions, exclusions, owner and confidence. Keep gross cash, recoverable VAT and economic cost in separate columns. A qualified tax reviewer decides the buyer's VAT treatment.
How is VAT added to a paid-social quote?
Multiply the net price by 1.2 for the standard 20% rate, and show the VAT separately on the invoice. In the worked example, £19,910 net becomes £23,892 including VAT.
What payment terms are allowed between businesses?
An agreed payment date must usually be within 60 days for business transactions. A longer period must be fair to both businesses. If no date is agreed, payment is late 30 days after the invoice or the delivery, whichever is later.
