There’s never been higher demand for digital marketing campaigns and services. Virtually all businesses operating today are looking to use digital platforms to secure as many clients and customers as possible. If you already have a digital marketing agency, you’ll know how competitive the industry is – and how crucial it is to stand out from your competitors and deliver consistently excellent results to your clients. But how can an agency price its services in a way that supports their growth goals without losing potential clients to pricing competition?
Here’s how.
Choosing a Reasonable Price Range
Your first step to choosing a price range for your agency should be to investigate what your competitors are charging for their services. This will ensure you don’t price yourself out of the market, and that you can still earn enough to fuel your agency’s growth.
There are many different methods to use to price your services, as we’ll explore below. However, remember that the most effective way to keep your clients returning is to offer customised, collaborative services that address their specific needs and help to improve their bottom lines.
Another method we love is to put yourself in your clients’ shoes and ask yourself what you would be willing to pay to hire a skilled and experienced digital marketing team. This, of course, depends on the budgets and goals of your target audience. Once you have a buyer persona in place, you can ask yourself this question while bearing these key metrics in mind.
Agency Experience
As with most things in life, you get what you pay for when hiring a digital agency. Most smaller and younger agencies charge lower prices than their more established peers, as they’re working to build their reputations and gain glowing client testimonials to build their portfolios.
If your agency is brand new, we recommend charging lower prices than your more established competitors to begin with. Then, work hard until you’ve earned the brand recognition you deserve. If you’ve already been around for a few years and enjoy a strong brand image, feel free to price your services at similar rates to those that your same-age competitors have chosen.
Firm and Consultant Experience
The levels of experience of your team members can influence your pricing structure considerably. If your team consists of young interns just learning the ropes, you may not be able to charge as much as an agency that offers its clients years or decades’ worth of collective experience.
The more skilled your team is – and the more you can evidence this to clients with certifications – the more you can charge.
Internal Expenses
Digital agencies shoulder a wide range of different internal costs, including office rent, equipment and supply expenses, utilities, and operational costs. Along with this, there’s remote work costs, software and tool expenses, and payroll expenses, including salaries, insurance, benefits, and bonuses.
Remember, the rates you set for your services need to be able to cover all these costs and still leave you with remaining profits to help drive your agency’s growth.
Scope of Work
What kind of clients does your agency work with? Are they single professionals, small businesses, or larger corporates that supply you with huge projects and tight deadlines? You’ll need to charge appropriately based on the scope, size and demands of each campaign you take on. A campaign for a massive multinational firm will use up far more time and resources than a simple campaign for a newly launched small business.
Typical Agency Pricing Models: A Brief Overview
One of the key factors that will influence your clients’ marketing expenses is the pricing models you choose for your agency. These are the most common pricing models used in the industry.
Packaged Pricing and Tiered Pricing
Many agencies offer packaged or tiered pricing models in a bid to give their clients clarity about exactly what will be delivered, and how much it will cost. Pricing packages can be customised to fit each client’s budget and requirements. This structure also gives them a range of different products and services from which to choose.
When offering packaged pricing tiers, you need to be absolutely confident that you and your team can deliver on every one of your services offered in the package chosen by a client. This pricing structure qualifies leads and gives clients a clear picture of the upfront costs of their digital marketing needs, helping them to plan more effectively.
Monthly (Retainer) Pricing
Offering monthly pricing plans for your services is very similar to signing clients on a contract basis. It’s a fantastic way to secure regular income for your agency, and your clients will appreciate the predictable monthly costs of your services.
Pricing Based on Projects
These project-based pricing models are often used in the digital marketing industry to charge clients for single projects based on each project’s scope and demands.
- Hourly rates. In this scenario, clients pay you an hourly rate based on the number of hours you spend working on their projects. This is a popular pricing structure among freelancers, but some agencies also charge hourly rates for services provided outside the scope of the original project.
- Recurring model. Recurring pricing models are much like monthly models. You’ll charge clients a specific amount of money within an agreed-upon time frame for providing your services on an ongoing basis.
- Performance-based. This pricing model allows you to base your fees on the performance and results of your work. You must be able to provide your clients with measurable outcomes to earn as much as possible in this case. So, be sure to use analytics tools to provide them with proof of media impressions, higher revenues, or enhanced reach and brand recognition.
How Much Should You Charge for Your Services?
According to Expert Market, the average cost of monthly digital marketing services in the UK in 2022 was around £978. When taken on a project-by-project basis, the average pricing for each project weighed in at around £1,840.
Your pricing will depend on the type of work you perform. For instance, if you provide pay per click advertising services to a client, your job will involve planning, launching, managing, and reporting on marketing campaigns across platforms like AdWords. You’ll perform progress monitoring weekly or monthly as your clients require. The PPC industry offers a range of pricing models, from flat fees to monthly and hourly rates; some will charge a percentage of ad revenues, while others offer PPC service packages to meet their clients’ needs.
One Size Does Not Fit All
There is no ‘perfect’ pricing structure for a digital marketing agency. Your pricing will depend on a range of unique factors, from your operational costs and your agency’s age to the size and scope of each project you take on.
Refer to our guide to ensure that you find the sweet spot for your agency’s pricing.