Last Updated: December 2025
If you run a PR or communications agency in Australia, your financial success depends on understanding the true cost of servicing each client. Most PR agencies operate on retainers, but without tracking time against those retainers, you have no idea whether you are making money or slowly going broke.
PR agencies that fail to track time against retainers typically over-service their best clients by 20 to 40 percent. On a $10,000 monthly retainer, that represents $2,000 to $4,000 in unbilled work every month. Over a year, you could be giving away $24,000 to $48,000 per client. Multiply that across your client base, and you begin to see why so many PR agencies struggle with profitability despite being busy.
Public relations and communications agencies face a unique financial challenge. Unlike law firms or accounting practices where every six minutes is tracked and billed, PR has historically operated on relationship-based pricing. Clients pay a monthly retainer, and the agency delivers results. The problem is that "results" can mean vastly different workloads from month to month.
The Australian PR industry generates approximately $1.5 billion annually, with agencies ranging from sole practitioners to large multinational firms. Industry benchmarks suggest healthy PR agencies maintain net margins of 15 to 25 percent. However, many Australian agencies operate below 10 percent because they cannot accurately measure the cost of service delivery.
The shift toward integrated communications has added complexity. Modern PR agencies do not just write press releases and pitch journalists. They manage social media, coordinate influencer partnerships, produce content, organise events, and handle crisis communications. Each of these services has different cost structures and margin profiles. Without proper financial tracking, it is impossible to know which services make money.
The retainer trap. Retainer pricing creates predictable revenue but unpredictable workload. A client paying $8,000 monthly might require 30 hours one month and 80 hours the next. If you are not tracking this, you cannot identify the pattern or address it.
Scope creep as standard practice. PR clients often treat their agency as an extension of their marketing team. Requests expand beyond the original brief, and agencies absorb the extra work to maintain relationships. This generosity destroys margins.
Media monitoring and tools. PR agencies subscribe to expensive monitoring platforms, media databases, and measurement tools. These costs are sometimes absorbed as overhead and sometimes recovered from clients. Inconsistent treatment makes it difficult to understand true profitability.
Event and production costs. When agencies manage launches, media events, or content production, they incur significant costs on behalf of clients. Photography, videography, venue hire, catering, and talent fees must be recovered accurately or they eat into margins.
Entertainment and FBT. PR work involves media lunches, client entertainment, and event hosting. The line between business development and client service blurs, creating Fringe Benefits Tax complexity.
Contractor reliance. PR agencies regularly engage freelance writers, photographers, videographers, and specialist consultants. Classification of these workers and correct payment treatment is essential.
This guide serves Australian public relations, communications, and integrated marketing agencies with annual revenue between $300,000 and $5 million. This includes corporate communications firms, consumer PR agencies, B2B and technology PR specialists, public affairs and government relations consultancies, and integrated agencies offering PR alongside content and social media services.
Whether you are a sole practitioner with contractor support, a boutique agency with five to ten staff, or a mid-sized firm approaching 30 people, these principles apply to your business.
Understanding these terms will help you manage your agency's finances more effectively.
1. Retainer revenue is a fixed monthly fee for an agreed scope of PR services. This typically includes media relations, a defined number of press releases or pitches, social media management, and regular reporting. The scope should be documented, but often is not.
2. Project revenue refers to fees for specific campaigns, launches, or initiatives with defined deliverables and timelines. Projects may be quoted as fixed fees or estimated hours at agreed rates.
3. Pass-through costs are expenses you incur on behalf of clients and recover at cost or with a markup. These include photography, videography, venue hire, media monitoring subscriptions allocated to specific clients, printing, and event production costs.
4. Work in progress (WIP) represents time and costs incurred on client work but not yet invoiced. For project work, WIP accumulates until billing milestones. For retainers, WIP can indicate over-servicing if hours worked exceed the implicit allocation.
5. Media monitoring costs are subscriptions to services like Isentia, Meltwater, or Streem that track media coverage. These may be treated as agency overhead or allocated to specific clients.
6. Earned media value is a measurement metric, not a revenue item. It estimates the advertising equivalent value of media coverage achieved. While useful for client reporting, it has no place in your accounting.
Revenue recognition for PR agencies follows straightforward principles, but implementation requires discipline.
For retainer fees, recognise revenue monthly as services are provided. If a client pays quarterly in advance, record the payment as unearned revenue and recognise one-third each month. This matches revenue to the period when you deliver services.
For project fees, recognise revenue based on percentage of completion or at defined milestones. A $45,000 product launch campaign might be billed as $15,000 on brief sign-off, $15,000 on launch execution, and $15,000 on completion and reporting.
For pass-through costs, treatment depends on whether you act as principal or agent. If you engage suppliers in your own name, mark up costs, and take responsibility for delivery, you are acting as principal. Record gross billings as revenue and gross costs as expenses. If you simply arrange services on behalf of clients and pass through actual costs, you are acting as agent. Record only any agency fee as revenue.
Most PR agencies act as principal for production services (engaging photographers, videographers, venues) and add a coordination markup of 10 to 20 percent. This markup is legitimate revenue reflecting your project management and supplier coordination.
Recognising these patterns in your own agency is the first step to fixing them.
A well-structured chart of accounts separates your revenue streams and cost categories for meaningful analysis.
Revenue categories to create:
Direct cost categories to create:
Overhead categories to create:
This structure allows you to see gross margin on service delivery and understand the true cost of production work.
Every client needs a master code, and every project needs a sub-code. This allows you to track profitability at both levels.
For retainer clients:
Create an annual engagement code and monthly sub-codes. For example, client Oceanic Health might have:
For project clients:
Create a project code for each engagement. A campaign for Melbourne Fashion Week might be MFW-2025-MEDIA, covering all costs and revenue for that project.
What to track against each code:
Time tracking on retainer accounts is where most PR agencies fail. It feels unnecessary because the client pays the same amount regardless. But without time data, you cannot manage your business effectively.
Minimum tracking categories:
Target utilisation rates for PR agencies:
The remaining time covers new business, internal meetings, professional development, and administration.
Implied hourly rates:
Calculate the implied hourly rate for each retainer to understand whether pricing is appropriate.
Example: A client pays $9,500 monthly retainer. You estimate the scope requires 40 hours of work. The implied rate is $237.50 per hour. If your blended cost rate (salary plus super plus overhead allocation) is $120 per hour, your gross margin is approximately 49 percent. This is healthy.
Now imagine you actually deliver 65 hours monthly. The implied rate drops to $146 per hour, and gross margin falls to approximately 18 percent. This is borderline unsustainable.
First week of each month:
Second week:
Third week:
Fourth week:
You must register for GST when annual turnover reaches $75,000. Most established PR agencies exceed this threshold.
Standard 10 percent GST applies to PR services provided to Australian clients. This includes retainer fees, project fees, consulting fees, and production services where you act as principal.
Pass-through costs and GST:
When you pay a supplier and recover the cost from your client, GST flows through correctly if you claim the input credit on the supplier invoice and charge GST on your invoice to the client.
Example: You engage a photographer for $2,200 including $200 GST. You invoice your client $2,420 including $220 GST (the original $2,200 plus 10 percent agency markup of $200, plus GST on the total). You claim $200 input credit and remit $220 output tax, netting $20 GST payable on your markup.
Services for overseas clients:
PR services provided to non-resident clients for use outside Australia may be GST-free. If you provide media relations services in Australia for an overseas company seeking Australian coverage, this is generally taxable. If you provide strategic counsel to an overseas client for use in their home market, this may be GST-free. Review each engagement against ATO requirements.
All employees must receive superannuation at 12 percent of ordinary time earnings. Pay quarterly by the 28th of the month following each quarter.
Contractor superannuation:
Superannuation obligations extend to contractors who work under contracts wholly or principally for labour. This commonly applies to:
The ATO targets service industries for SGC audits. Document your contractor arrangements and seek advice if classification is uncertain.
PR agencies frequently provide entertainment as part of client service and business development. This creates FBT obligations.
FBT applies when:
Common PR entertainment scenarios:
Media lunches where agency staff attend with journalists: Potential FBT if the agency pays. The meal is entertainment provided to employees (your staff attending). The cost relating to journalists may be exempt as a minor benefit if under $300 per person per occasion.
Client entertainment where agency staff attend: Potential FBT on the portion relating to your staff. The client portion may be either a client recoverable cost or business development expense.
Agency team celebrations: FBT applies unless exempt as a minor benefit.
Practical approach:
Separate entertainment expenses by category in your accounting system. Track whether agency staff attended each entertainment event. Consult your accountant on FBT treatment for your specific circumstances.
When engaging contractors with an ABN, generally no withholding is required. The contractor invoices you including GST (if registered), and you pay the full amount.
If a contractor does not provide an ABN, you must withhold 47 percent from payments and remit to the ATO.
TPAR reporting:
PR agencies providing services to other businesses must lodge a Taxable Payments Annual Report if you pay contractors for creative, IT, or marketing services. Report payments to:
Lodge TPAR by 28 August each year covering the prior financial year.
Accounting platform:
Xero is the standard for Australian PR agencies. The Business plan at $78 monthly handles most agency needs. Add Xero Projects at $13 per user monthly if you want time tracking integrated with accounting.
MYOB Business at approximately $130 monthly suits agencies preferring traditional interfaces.
Time tracking:
Harvest at $12 per user monthly provides excellent time tracking with project budgets and team utilisation reporting. Strong Xero integration.
Toggl Track at $13 per user monthly offers simpler time tracking with good reporting.
Xero Projects works if you want everything in one system but offers less sophisticated utilisation analysis.
Project management:
Monday.com from $12 per user monthly handles client work, campaign tracking, and team workflow. Good for visual project management.
Asana from $15 per user monthly provides strong task management and timeline views. Popular with PR teams for campaign coordination.
Basecamp at $349 monthly flat rate suits agencies wanting unlimited users on simple, straightforward pricing.
PR-specific tools:
Isentia for media monitoring: Pricing varies based on scope, typically $1,500 to $4,000 monthly for agency accounts covering multiple clients.
Meltwater for media monitoring and social listening: Enterprise pricing based on requirements.
Medianet for media database access: Approximately $400 monthly for agency subscriptions.
Coverage Book for PR reporting: From $99 monthly for creating client-ready coverage reports.
Example software costs for an 8-person agency:
Total: approximately $33,600 annually
Note that media monitoring is the largest cost. If you recover this from clients either through direct charges or built into retainer pricing, your effective software overhead drops significantly.
Financial KPIs:
Operational KPIs:
- Retainer right-sizing: Review each retainer quarterly. Compare hours delivered against the implicit scope. Clients consistently requiring 30 percent or more additional time need scope discussions. Either increase fees, reduce scope, or consciously accept the investment as relationship building with a growth client.
- Scope documentation: Create clear scope documents for every retainer. Define what is included (number of releases, media targets, reporting frequency) and what triggers additional fees (events, crisis support, additional campaigns). When scope creep occurs, reference the document.
- Pass-through margin consistency: Establish a standard markup policy. 15 percent on production costs is common and accepted. Apply it consistently. This transforms pass-through work from a breakeven exercise into a margin contributor.
- Monitoring cost recovery: Decide whether media monitoring is overhead or a client cost. If you charge clients, ensure contracts specify this. If you absorb it, factor the cost into retainer pricing. Do not absorb it accidentally.
- Contractor rate negotiation: Regular freelancers often accept slightly reduced rates in exchange for consistent work. A freelance writer charging $500 per article might accept $425 for guaranteed volume. This improves your margin without affecting quality.
How should PR agencies recognise retainer revenue?
Recognise retainer revenue monthly as services are provided, not when invoiced or collected. If a client pays quarterly in advance, record the payment as unearned revenue (a liability) and recognise one-third as revenue each month. This matches revenue to the period of service delivery and provides accurate monthly financial statements.
Should PR agencies track time on retainer accounts?
Yes, absolutely. Time tracking on retainers is essential for understanding profitability. Without it, you cannot know whether retainer pricing is appropriate. Track hours by activity type against each retainer client. Calculate the implied hourly rate (retainer fee divided by hours delivered) monthly. This data informs pricing reviews and scope discussions.
How should agencies handle media monitoring costs?
You have two options. First, treat monitoring as overhead absorbed in retainer pricing. This simplifies client billing but requires you to factor monitoring costs into retainer quotes. Second, charge monitoring costs directly to clients as a separate line item or explicit retainer component. Either approach works, but be consistent and ensure your pricing reflects the true cost of service.
What markup should agencies add to production pass-through costs?
A markup of 10 to 20 percent on production costs (photography, videography, printing, event production) is standard and accepted. This reflects your time coordinating suppliers, managing quality, and taking responsibility for delivery. Apply the markup consistently across all clients. Document your policy in engagement letters.
Should freelance PR consultants be classified as contractors or employees?
Classification depends on the actual working arrangement. Freelancers who work regular hours for your agency, use your equipment and systems, are presented as agency staff to clients, and work primarily for you are likely employees regardless of their ABN. This means you must pay superannuation, provide leave entitlements, and handle PAYG withholding. Review each arrangement against ATO guidelines.
How do PR agencies handle Fringe Benefits Tax on entertainment?
Entertainment provided to employees or their associates triggers potential FBT liability. This includes media lunches where agency staff attend, client dinners, and team events. Track entertainment expenses by category and whether staff attended. Minor benefits under $300 per person per occasion may be exempt. Consult your accountant for advice specific to your situation.
What software do PR agencies need for bookkeeping?
At minimum, you need accounting software (Xero or MYOB) and time tracking (Harvest, Toggl, or Xero Projects). Project management software (Asana, Monday.com) helps coordinate client work. PR-specific tools include media monitoring (Isentia, Meltwater), media databases (Medianet), and reporting tools (Coverage Book). Budget $2,000 to $4,000 per employee annually for software depending on your monitoring requirements.
How do agencies calculate client profitability?
Track all costs against each client: staff time (hours multiplied by fully loaded cost rates), contractor costs, allocated monitoring costs, and direct expenses. Compare total costs against revenue from that client. Calculate gross margin as revenue minus direct costs, divided by revenue. Review profitability quarterly and address unprofitable clients through pricing or scope changes.
What payment terms should PR agencies use?
Retainer invoices are typically due on the first of the month for that month's service, payable within 14 days. Project invoices follow milestone billing with 14 to 30 day terms. Pass-through costs are billed on completion with 14 day terms to protect your cash flow. Include payment terms in engagement letters. Follow up overdue accounts promptly.
How should agencies handle crisis management billing?
Crisis work typically falls outside standard retainer scope. Define this clearly in engagement letters. Bill crisis management either at agreed hourly rates or as a project fee based on scope. For retainer clients, offer a discounted crisis rate as a benefit of the relationship. Document crisis work separately to demonstrate value and justify fees.
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Disclaimer: This guide provides general information only and does not constitute tax, legal, or financial advice. Contractor classification rules, FBT on entertainment, and instant asset write-off thresholds change regularly. Always verify current requirements with the ATO, consult with a registered tax agent for tax matters, and seek legal advice for employment and contractual matters specific to your circumstances.
Scale Suite delivers embedded finance and human resource services for ambitious Australian businesses.Our Sydney-based team integrates with your daily operations through a shared platform, working like part of your internal staff but with senior-level expertise. From complete bookkeeping to strategic CFO insights, we deliver better outcomes than a single hire - without the recruitment risk, training time, or full-time salary commitment.
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