How to Calculate the Net Rate for Advertising Agencies
Hiring an ad agency for the first time can be a heady moment, as it often signals an effort to publicize your products, services and/or brand to a wider audience. Choosing to work through an agency for media buying inserts an intermediary between your company and the TV, radio, print or Internet publishing entity. For its pains, the agency takes a commission, typically 15%, from the publication's gross advertising rate. The net rate represents the gross rate minus the agency commission.
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Instructions
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Find out what the gross rate is. This information is published on the publication's advertising rate sheet. Rate sheets are often created with agency buyers in mind.
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Multiply the gross rate by the agency fee, expressed as a decimal. For example, if the gross rate is $20,000 and the agency fee is 15%, the calculation is $20,000 X 0.15 = $3,000.
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Deduct the resulting figure from the gross rate. In this example, the equation would be $20,000 minus $3,000 which equals $17,000. $17,000 is the net rate.
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Tips & Warnings
If neither the gross nor the net rate is to your liking, feel free to negotiate with the agency and/or the publication.
