Forrester: 25% of North American Agencies Have Ditched Hourly Billing

As AI rewrites the economics of creative work, a new study has put hard numbers on a shift the industry has been debating for years: a quarter of North American agencies have moved exclusively to fixed-fee pricing, and the overwhelming majority say it's working.

The findings come from Forrester Consulting, commissioned by Dentsu Creative, and were released Friday via Adweek. The report, The Fixed-Fee Advantage: Unlocking Agency Value While Addressing Pricing Friction, surveyed 356 marketing and procurement leaders across the US and Canada.

The Numbers

25% of agencies have exclusively abandoned time-based billing in favor of fixed-fee models. Of those early movers, 63% say they are either satisfied or extremely satisfied with the arrangement, a satisfaction rate that should give pause to any agency still defending the billable hour.

Demand is not confined to existing adopters. Among marketers not yet using fixed-fee pricing, more than half said they were interested or extremely interested in making the switch. A further 28% described themselves as somewhat interested. Forrester characterized this as signaling "broad openness" to the model across the North American market.

That is a significant body of latent demand. The practical implication: agencies that have not yet considered their pricing strategy may be misreading where their own clients' preferences already sit.

Why Now

The timing is not incidental. The study lands as AI tools are compressing the labor hours that underpin traditional time-based billing. When a campaign strategy that once took a team a week can be delivered in a fraction of that time, hourly billing stops serving either party well. Agencies lose revenue on efficiency gains; clients pay for time rather than outcomes.

Fixed-fee structures resolve this tension by anchoring value to deliverables rather than clock hours. The model gives procurement teams what time-based billing structurally cannot: a predictable number they can compare across competing bids. For agency clients with procurement processes built around cost comparison, fixed fees remove a category of friction that has historically complicated vendor selection.

The study's commission is itself notable. Dentsu Creative, one of the major international agency networks, sponsored independent third-party research specifically on fixed-fee adoption. That approach signals the holding-company tier is actively building market rationale for pricing model migration, not merely observing it.

What This Means for APAC

North American data does not translate automatically to Asia Pacific. The commercial structures, client expectations, and competitive dynamics across APAC markets vary significantly. Agency relationship norms in many APAC markets have historically leaned toward retainer-based arrangements rather than project-by-project fixed fees.

But the AI pressure driving the North American shift is not geographically bounded. As AI tools penetrate APAC agency workflows, the economic logic pushing North American agencies toward fixed-fee pricing will arrive in Asian markets on a compressed timeline. Marketing leaders and procurement teams in APAC who review their vendor contracts now, before external pressure forces the conversation, are better positioned to shape the terms.

The Bottom Line

A Forrester study with 356 respondents is a data point, not a mandate. But 25% adoption among agencies, paired with 63% satisfaction and majority demand from non-adopters, is a commercially meaningful signal. The hourly billing model's utility as the default agency commercial model is in question. The evidence, for now, comes from those who have already made the move.