I’ve written before about the boost you can get from outsourcing some or all of your marketing functions. But companies with limited resources often worry outsourcing B2B marketing will be too expensive and instead try to hire a single internal person to handle all their needs. More often than not, that wishful thinking ends up being unfair to the person hired — and to the business, too.
What are the real cost factors of hiring in-house marketing resources versus outsourcing? This blog compares a few different scenarios to clarify the business case.
What do in-house marketing resources really cost?
Conservatively, a company might expect to pay a junior marketing person $60,000 a year. Someone senior person might earn $100,000 or more. Of course, the cost of a full-time employee is more than just their salary. Payroll taxes, benefits and overhead expenses like computers and training add to the total. These can vary widely depending on where you’re located, the industry you’re in, the employee’s seniority, and more. Generally, these add-ons can increase salary costs by 50-100% — or more, if you also include bonuses, commissions and other extra compensation.
Finding and recruiting the right person for the job represent other talent-related costs you need to consider, not to mention the fact you are committing to the person full-time for the longer term. If you discover a rock star, these costs are all worth it, but if you don’t this may be an ongoing expense.
It’s good to have a complete and accurate handle on the costs of hiring in-house before evaluating the relative expense of outsourced support.
It’s good to have a complete and accurate handle on the costs of hiring in-house…
The costs of outsourcing to a marketing team
Outsourcing costs are much simpler to calculate. You’re either paying an agreed-upon price for a defined service or a monthly retainer for a specified scope of work, and that’s it. There are no employment taxes, benefits or overhead expenses. Those costs are borne by the company you hire.
Now, this is where many companies object and say, “Yeah, but an agency’s hourly rate is going to be way higher than what I pay someone in-house.” On paper, sure — but you’re not paying that outsourced rate on a full-time basis. All you pay for is work done. You don’t have to worry about filling someone’s time, and instead of a single person’s skillset, you gain access to the diverse skills of a team of specialists — so that you always get what you need when you need it.
Breaking down the business case for outsourcing B2B marketing
With the various cost factors of hiring versus outsourcing in mind, we can look at a few scenarios to see how the two compare. I’ve kept this pretty simple for illustration’s sake because every situation is going to be a little different, and I’ve been fairly conservative throughout. If we stick to the $60,000 junior salary and $100,000 senior salary estimates, let’s assume:
- Payroll taxes are 10% of salary
- Benefits are 15% of salary
- Additional overhead is 25% of salary
On the outsourced marketing team side, let’s presume a monthly retainer model and three different levels of support:
- Low at $5,000/month
- Medium at $10,000/month
- High at $15,000/month
Scenario 1: Junior marketing hire vs outsourcing
In this case, a company decides to hire a junior marketing person to get started with a lower-end salary commitment. But since no one person can do all the writing, design, web development and other tasks associated with running a marketing program, that junior hire is still going to need to call on outsourced support. They’ll also need help developing a proper marketing strategy, since they aren’t likely to have experience in that area.
Based on those assumptions, the salary and related costs for a junior marketing person will be about $90,000, with about $5,000–$7,500 per month in additional support from an agency or freelancers, for a total cost of $150,000–$180,000.
By comparison, an outsourced marketing team could produce a basic volume of marketing content for as little as $5,000 per month — saving about 60% of the cost of the junior marketer. For a more intensive workload, a $10,000 monthly retainer would still save between 20% and 33% of the cost of an internal hire, totalling about $120,000 per year.
Outsourcing B2B marketing compared TO HIRING A JUNIOR MARKETING PERSON Can save you between 33-60%
Scenario 2: Senior marketing hire vs outsourcing
Hiring a senior marketing person would certainly fill the experience gaps that come with a junior resource, but even a senior person can’t do everything — and is more likely to be pulled into additional planning meetings, taking up more of their time.
So here the salary and related costs could amount to $150,000 per year based on the assumptions above. Add to that an outsourcing budget of $2,500–$5,000 per month for capacity and strategic advice, and the total annual cost comes in somewhere between $180,000 and $210,000.
The equivalent monthly retainer for an outsourced marketing team will be the same as above at $10,000 per month — $120,000 per year — resulting in cost savings between 33% and 43%.
Outsourcing B2B marketing compared TO HIRING A SENIOR MARKETING PERSON Can save you between 33-43%
Scenario 3: Scaling the team vs outsourcing
Few companies in the real world are likely to hire just one marketing person — at least not for very long. As they grow, their marketing investments grow too. How does that change the outsourcing value proposition?
Let’s imagine a company hires both a junior and senior marketing person for a total of $240,000 in salary and related expenses. While the need for additional support will go down, there’s still no way to get everything done in-house, so we can assume an add-on monthly cost of $2,500 starting out (for a total of $270,000 per year).
Contrast that with an outsourced partner handling the full workload. Since we’re in a growth phase with this scenario, the monthly retainer is bound to be higher. If we assume $15,000 per month, the annual cost will be about $180,000 — still 33% lower than the junior + senior + outsourced support model.
Outsourcing B2B marketing compared TO scaling your team to two people Can save you 33%
Do your own math
Once again, the calculations above are rough “back of an envelope”-type estimates, but the takeaway is that you can save between 20% and 60% on marketing by outsourcing to an experienced team. To test out the assumptions, run the numbers for your own business and see what kind of savings you might get. As you do, remember:
- Salary is just the start of what an employee costs. Be sure to include payroll taxes, benefits and overhead.
- No marketing hire can do it all, so include some allowance for strategic support and execution of key functions like design, writing, web development and social media. $2,500 per month is a good minimum working figure.
- With outsourcing, you pay only for what you need, so the hourly rate doesn’t tell the whole story. Look at the overall number of hours/level of effort you expect to require at that rate for a sense of the true cost.
…you can save between 20% and 60% on marketing by outsourcing to an experienced team.
If you want to consider outsourcing and need help doing the calculations, I am happy to walk you through a custom calculation to see which model works for you, whether that is outsource it all or hire and outsource some pieces. Reach out to book a free call to look at the potential cost savings of outsourcing your marketing in more detail.