Trends in Agency Pricing

“I’ve wasted so much money on agencies, marketing companies, SEO/SEM experts…”

That was the lament of a small business owner I met the other day. He went on to say, “They promised me results and I never saw the payback.”

As we know, that story always has two sides. Some clients enter into relationships with marketing companies without a clear sense of what they are actually buying. But, in other cases, agencies’ pricing models are not in line with the needs of business owners.

Hubspot recently published an overview of the different types of agency pricing models. Each method has its advantages and disadvantages. But one thing is clear…clients have the ability to do more pricing homework than ever before and are more demanding (rightfully so) in holding their service providers accountable for outcomes and results.

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However you choose to price your services, here are some guidelines:

  • Make sure the client is very clear on outcomes. Many clients expect social media, PR, or even PPC advertising to be that “silver bullet” that will transform their bottom line. Be transparent and honest about expectations.
  • Stay on top of competitive pricing, especially in your local market. If you charge significantly more than other similar marketing service providers, be prepared to explain why.
  • Never ask “What’s your budget?” Smart clients expect you to give them reasonable estimates and alternatives.
  • Report proactively and regularly on activities and results. Remind your client regularly what you’ve delivered against their marketing investment.
  • Don’t “bury” costs in your billing. Again, clients have gotten very savvy. If you are marking up third party expenses by 20 percent, let your client know upfront. Note that some agencies are moving towards simply charging a management fee rather than adding a flat percentage to out-of-pocket costs. That may result in a healthier client relationship in the long run because your client knows that you’re recommending a particular tactic because you believe it will worknot because you’re making 20 cents on every dollar you charge.
  • Consider “owning” a piece of the business. If you are signing-on to a long-term project, you may consider structuring a bonus fee arrangement. Your compensation will be partially tied to the success of the approaches you’re recommending. What better way to prove to a client you have skin in the game?

If you view your client’s spending as if you are investing your own agency’s money, you will build trust and loyalty. Clients will come to view you as a true member of the team rather than someone who is simply performing work for hire.

Claim Your Listing

Clients look for agencies that deliver great results AND are great to work with. Make sure prospective clients can easily find you—and read glowing reviews about you.<!–[if lte IE 8]>

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