One quarter of North American agencies have exclusively shifted to fixed-fee pricing, according to a new study from Forrester Consulting commissioned by Dentsu. The report, The Fixed-Fee Advantage: Unlocking Agency Value While Addressing Pricing Friction, surveyed 356 marketing and procurement leaders across the US and Canada.
Of those already on fixed-fee models, 63% reported being satisfied or extremely satisfied with the approach. Among marketers not yet using fixed fees, more than half said they were interested or extremely interested in adopting the model. A further 28% said they were somewhat interested.
Of North American agencies have moved exclusively to fixed-fee pricing, with 63% reporting satisfaction. The billable hour model is losing its grip.
The shift is being driven by two forces. First, AI is compressing the time it takes to produce deliverables. When an agency can generate a first draft of a media plan or a creative brief in minutes rather than hours, billing by time worked becomes either dishonest or unprofitable. Fixed fees solve that tension by pricing outcomes, not inputs.
Second, client procurement teams are demanding predictability. Hourly billing creates budget uncertainty. Scope creep generates surprise invoices. Fixed fees give clients a number they can plan around, which makes marketing budgets easier to defend internally.
The Australian market is moving in the same direction, though more slowly. Local agencies are experimenting with value-based and retainer models, but the cultural shift away from time-based billing is still in its early stages. The Forrester data suggests that resistance will become increasingly difficult to maintain as clients demand the model and competitors adopt it.
The study also found that fixed-fee agencies reported stronger client relationships and fewer billing disputes. When the commercial model removes the incentive to over-service or under-deliver, both sides focus on the work rather than the timesheet.
Why it matters
For Australian agency leaders, this data is a preview of where the market is heading. The 25% adoption figure in North America will be 40 to 50% within two years if current trends hold. Australian clients working with global agencies will encounter fixed-fee models through their international partners and will start asking local agencies to match.
For marketers, fixed fees change the procurement conversation. Instead of negotiating hourly rates and FTE counts, the discussion shifts to deliverables, timelines and outcomes. That is a healthier framework for both sides.
What to do about it
If you run an agency, model what your top 10 clients would look like on fixed-fee contracts. Understand the margin impact before clients force the conversation.
If you are a marketing leader, ask your agency partners how AI is changing their cost base. If they are using AI tools but still billing hourly, the maths does not add up.
Build scope definition into the fixed-fee model. The biggest risk is scope creep without a mechanism to adjust.
Watch Dentsu's moves in Australia. They commissioned this research for a reason.
The agencies that price for value will attract the clients who buy for outcomes. The rest will compete on rates.
