In-house or agency is one of the more expensive decisions you will make this year, and most owners make it without ever seeing a proper set of numbers.
It usually starts the same way. Marketing is nobody’s job, so it becomes everybody’s job, which means it is nobody’s job. Someone suggests hiring a marketing manager. A salary figure gets mentioned, and within a fortnight there is a job advert live.
Or it happens in reverse. An agency invoice lands, it looks steep next to a salary, and someone says the obvious thing: we could employ someone for that.
Both instincts are reasonable. Both are usually based on the salary figure alone, which is the wrong number to compare.
TL;DR: A marketing hire on a £45,000 salary costs your business just over £52,000 a year once employer National Insurance and pension are added, which works out at roughly £230 for every day they are actually at their desk. Compare that figure against an agency quote, not the salary. Then ask a harder question: which option gives you more of the skills you are currently short of, and which one can you realistically manage?
In-house or agency is a cash question before it is a marketing question
A salary is a commitment. An agency retainer is a contract you can end, usually on 30 to 90 days notice.
That difference matters. If trading tightens in month seven, one of those two costs can be turned off in a quarter and the other one involves notice periods, redundancy consultation and a conversation you will not enjoy.
None of that makes hiring wrong. It just means the in-house or agency choice belongs on the same page as your other fixed cost decisions, not filed under marketing.
In-house or agency: what a marketing hire actually costs
Take a competent generalist marketing manager outside London. Indeed currently puts the UK average at £42,357, while Reed puts it at £51,217. Call it £45,000 and you will not be far out.
Here is what £45,000 costs once it hits your payroll:
- Salary: £45,000
- Employer National Insurance at 15% on earnings above £5,000: £6,000
- Pension at the 3% employer minimum on qualifying earnings: £1,163
- Total: £52,163 a year, or £4,347 a month
The current employer National Insurance rate is 15% on everything above a £5,000 secondary threshold, so it bites early and it bites hard. Employment Allowance can knock up to £10,500 off your National Insurance bill, but if you already employ people you have almost certainly used it.
Now divide that by the days you actually get. There are 260 working days in a year. Statutory holiday takes 28 of them. The ONS puts average sickness absence at 4.4 days per worker. That leaves about 228 days.
£52,163 divided by 228 days is £229 a day. Before a laptop, a desk, software subscriptions, training, or a single pound of actual advertising spend.
That is the number to hold in your head when you look at an agency quote. Not £45,000. If you are paying an agency less than about £4,300 a month, you are paying less than one mid-level employee.
One person cannot do the whole job
This is the part of the in-house or agency decision owners underestimate, and it is not the employee’s fault.
Getting a business found and turning that attention into enquiries involves at least eight distinct skills: commercial strategy, writing, design, website development, paid advertising, search visibility, data and reporting, and email. A person who is genuinely good at three of them is doing well.
Hire one person and you get one person’s three. The other five either do not happen, get done badly, or get subcontracted out anyway, at which point you are paying a salary and buying in specialists on top.
Owners rarely see it coming, because the job advert asked for all eight and someone said yes at interview.
What you are actually buying from an agency
You are buying a bench rather than a body. Several specialists, each doing the thing they do all day, sharing the cost across clients.
You are also buying out risk. No recruitment process, no probation, no holiday cover, no notice period, no awkward conversation if it is not working. If performance drops, that is the agency’s problem to fix rather than yours to manage.
What you give up is presence. An agency is not in the room when your sales team says the enquiries are rubbish. It does not overhear the thing your best customer said on Tuesday. That gap is real and must be managed deliberately, usually with a fortnightly call and an internal owner.
If you want the wider financial case, we have written about why working with a growth agency makes financial sense in more detail.
When hiring in-house is genuinely the right call
Hire when you can tick most of these:
- You already know what works. You are buying execution capacity, not answers.
- Your product or service knowledge is deep and slow to transfer. Technical manufacturers and specialist engineers often sit here.
- There is enough work to keep somebody properly busy five days a week, every week.
- Someone in the business can actually manage them and judge whether the work is any good.
That last point is the one owners skip. An unmanaged marketer with no one qualified to review their work is the most expensive option on the table, because you pay for twelve months before you find out.
When an agency is the right call
Go external when you need several skills at once and none of them full time. When you do not yet know which channels earn their keep and you need someone who has already run that experiment for businesses like yours. When you need results inside two quarters and cannot wait out a recruitment process plus a notice period plus a ramp up.
And when nobody internally can supervise marketing work. On the in-house or agency question, buying judgement is a perfectly sensible thing to do.
The arrangement that suits most owner-managed businesses
For most businesses turning over £1m to £10m, the in-house or agency framing is a false choice. The version that works is one internal person who owns the relationship, understands the business inside out, writes and coordinates, and holds the external team to account. Alongside them, an agency supplying the specialist trades.
That internal person does not need to be a senior marketer. A capable coordinator on a lower salary, properly briefed, beats an expensive generalist working alone.
Whichever route you take, the spend needs to be sized against your revenue rather than plucked from the air. Our guide to what a business your size should actually spend on marketing covers how to set that number.
How to know within 90 days whether you chose right
Whichever way you go, decide up front what you will measure, then hold it to that. Four things, reviewed monthly:
- Enquiries per month, split by where they came from.
- Cost per enquiry, using the true cost figure, not the salary or the invoice.
- What proportion of those enquiries your sales team considers worth quoting.
- Revenue closed from them, which usually lags the other three by a quarter or more.
Ninety days is enough to see whether the work is landing and the reporting is honest. It is not long enough to judge revenue in a business with a long sales cycle, so do not pull the plug on that basis alone. Note too that falling traffic with steady enquiries is often a sign things are working rather than failing.
Get those four numbers in front of you every month and the in-house or agency question stops being a matter of opinion. It becomes arithmetic, and you are already good at arithmetic.
How much does a marketing manager really cost a UK business?
Budget for roughly 16% on top of salary before any overheads. A £45,000 salary costs about £52,163 a year once you add employer National Insurance at 15% on earnings above £5,000 and the 3% minimum pension contribution. Spread across the 228 working days you get after holiday and average sickness absence, that is about £229 a day, before equipment, software and advertising spend.
Is an agency cheaper than hiring in-house?
Often, but on the in-house or agency question cost is the wrong test. A retainer below about £4,300 a month costs less than one mid-level employee, and it buys several specialists rather than one generalist. The better question is coverage. If you need strategy, design, web, paid advertising and reporting, an agency supplies all of them. One hire supplies one person’s strengths and quietly leaves the rest undone.
When should a business hire its first marketing person?
Hire when you already know which activity generates enquiries and simply need more capacity to do it, when there is genuinely five days of work each week, and when someone in the business is able to manage and review that work. If you are still working out what actually generates enquiries, buy that answer externally first. Hiring someone to find it out is slower and considerably more expensive.
What should I hold a marketing agency accountable for?
Enquiry volume, enquiry quality and cost per enquiry, reported monthly and split by source. Not impressions, rankings or followers. Ask for the number your sales team recognises, which is qualified enquiries worth quoting. Agree the format in month one. If an agency cannot or will not report against commercial outcomes, that tells you everything you need to know, and it tells you before the second invoice arrives.
If you are weighing up a marketing hire against outside support, put real numbers next to both before you commit to either. Talk to Damteq and we will tell you honestly which one your business actually needs, even when the answer is that you do not need us.
