What Goes Into Influencer Rates?

What is the monetary value of influencer marketing? It’s a question we get asked all the time, especially when it comes to allocating budgets toward influencer programs.

After all, influencer marketing has been heralded as a way to receive a strong return on investment for smaller budgets than traditional advertising requires. So why are influencer rates all over the place, and why can it seem so expensive to launch an influencer campaign? Let’s break it down:

Know what goes into influencer fees.

When you book an influencer, you are paying for:

• Photography/videography

• Model(s)

• Creative direction

• Location

• Photo/video editing

• Copywriting

• Agency fees (potentially)

• Usage rights (potentially)

• Exclusivity (potentially)

All within that one influencer fee, whereas those costs are spread over multiple departments, employees, and outside services for most companies. 

While many companies measure traditional marketing efforts in terms of CPM, that metric traditionally only accounts for media fees. When calculating influencer CPM, you must also account for influencer, agency, production, usage, and exclusivity fees in addition to media fees, so it’s a bit of an apples-to-oranges comparison.

Additional factors can also have an impact on what an influencer charges for a project:

• Scope of work

• Production costs

• Exclusivity and usage rights

• Brand affinity

• Influencer demand

• Caliber of influencer

• Engagement and conversion rates

• Niche

There is no formula for influencer rates.

Each influencer has the ability to set their own price for branded content, combining both quantitative (following, engagement metrics) and qualitative (demand, brand affinity) factors to determine what they charge. This is why you can speak to two influencers who on paper have near-identical profiles and present two varied fees for the same project.

Working with an agency such as Lyehouse will help you understand the larger landscape of influencer rates. While there isn’t one “industry standard” for determining rates, we continuously monitor project fees in this ever-changing industry and can help you separate the realistic numbers from the outrageous.

Provide clear and fair payment terms.

Paid partnerships are the main source of income for many influencers, so it is important to present clear and fair payment terms when partnering with influencers. For one-off partnerships, a net-30 payment is typical, but for larger programs, we suggest being flexible with payment terms to ensure creators are receiving compensation in a timely manner. This may come in the form of 50/50 payment terms so that influencers aren’t waiting until the program is complete to receive any payment.

Including payment terms that are fair and get influencers compensated in a timely manner will only improve your reputation amongst influencers and help keep the influencer marketing industry transparent and fair for all.

If you're ready to get started on your 2022 influencer marketing campaigns, don't be afraid to reach out.

What Factors Go Into An Influencer’s Rate?

Influencer rates cannot be determined by formulas and quantitative factors alone. The truth is much more complicated.

Let’s discuss influencer rates. Within our industry, it’s one of the most widely debated topics, one that lacks transparency and standardization across the board. We’ve seen influencers undervalue their worth with low rates, and we’ve seen brands bristle at influencers asking for what the brands view as overinflated fees. It’s a fine line to walk; ask for too little and you’re setting up a standard of brands underpaying creators; ask for too much and run the risk of not meeting the brand’s ROI expectations, or turn them off influencer marketing altogether.

While it would be easy to have a set formula to determine what an influencer should be charging for a sponsored post, the truth is that influencer rates are not one-size-fits-all. Two influencers who on paper may appear similar in following and content may charge two vastly different rates. That doesn’t mean that one is overcharging or one is undercharging; it simply means that there are more factors to consider that have an impact on an influencer’s fee for sponsored content. 

Factors To Consider

Analytics: Quantitative numbers like following size and engagement rates are a great place to start, but they don’t tell the whole picture. An influencer could have a million followers but reach the same audience as an influencer with 50K followers. 

Demographics: Who is the influencer’s audience? Do they appeal to in-demand millennial and Gen Z users? Do they have a majority-US following? Strong demographics can raise an influencer’s fee.

Campaign scope: The scale of a campaign will have an impact on an influencer’s fee. One Instagram photo will cost less than a 5-minute professionally-filmed IGTV video, for example. Some influencers will charge for multiple posts a la carte, while others may offer “discounted” rates for comprehensive projects. 

Content Usage: Using an influencer’s content on brand-owned channels and materials can raise the price of a campaign. It’s important to outline exactly where and for how long your brand intends to use an influencer’s content so there is no confusion about usage.

Exclusivity: Exclusivity clauses are important for a lot of brands—you don’t want to have an influencer partner feature your competitor the next day!—but they do affect rates. Short time frames with specific category exclusivities (for example, a 1-week exclusivity in the shampoo category) will incur lower fees than broader exclusivity requirements (like a year-long exclusivity in the hair space). 

Expertise: The recommendations of industry experts are highly valued and thus can drive up the price of a sponsored post. A verified account with a blue check can also lend an air of credibility and likewise raise an influencer’s rate. 

Demand: It’s simple economics: in-demand influencers can charge more for partnerships. Influencers often limit the amount of partnerships they take on to avoid oversaturating their feeds with branded content, so highly sought after influencers may raise their rates. Influencers may also charge a premium during holidays when demand surges. 

Content quality: How does the influencer create content? Do they use their phone, or are they hiring photographers and videographers? Are their captions compelling and thought-out, or are they simple and to the point? 

Management: Yes, management means an influencer is giving a certain percentage to their agency, but it also establishes the influencer as having a proven track record. 

Past partnerships: Past partnerships can also showcase an influencer’s track record in the space. Working with prestigious brands and securing repeat partnerships can speak to an influencer’s success and ability to market effectively to audiences. 

Press appeal: Celebrities and public figures are so appealing for brands because they can garner press coverage, which is also why they can charge a premium for sponsored content compared to traditional influencers with similar following sizes.

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