Expert: Peter Gabany - 9/24/2008

Question
QUESTION: Peter,

I own a few billboards in Texas and recently started working with a media planning and buying agency. They have a client interested in renting all of the boards. I gave the price of 10k.  The representative at the media planning and buying agency asked if that price of 10k was gross or net? I"m burning my britches over this one. I'm not to sure if it's net or gross. If it is gross does that mean the agency will take there percentage from the 10k I asked for which will leave me with only $8,500 based on 15%???

Thanks for the help

ANSWER: Most outdoor media is quoted at GROSS and the agency will take their 15% (actually 17.65%) off the quoted price. Now, some (few) quote as a net figure and the agency is advised to “gross up the costs”.

Please notify your agency and advise them of what you meant and get your money.

When you create you rate card, create your programs around 4 week flights or periods. Keep your rates consistent and advertise the net or gross amounts (I would do gross) and in the mouse type note that certified agencies can take a 15% commission.

Best of luck,

Pete

---------- FOLLOW-UP ----------

QUESTION: Thanks for the info Pete.

So, basically the media planning and buying agency will charge their client 10k for the boards. Then the agency will take their cut out of the 10k and pay me the remainder. Correct?

If that is the case. In the future should I note that the 10k is net or is it better to juice the 10k up to cover the agency cut and call it GROSS?

Thanks again

Answer
There should be no “juicing” of fees. The media properties should have a business rate based on your conversion formulas. This is the price you need to derive to make the business viable. Your only decision is to put your pricing together and present as either gross or net.

If it were me I would present my pricing as gross.

I hope that this helps,

Cheers,

Pete