How To Keep Your Pricing Competitive As An Agency
Anyone running an agency has hit their head on the issue of pricing. There are many deciding factors involved in the Who, What, Why’s of pricing and it can be difficult to get a grip on it.
To make sure you keep your head above water, we’ve compiled the guidelines you need to put a monetary value on your agency’s work.
Setting The Bar Low
The first thing you need to do is define your make-or-break point. How much revenue do you need to make to survive as an agency? This way you can set the bar and exclude any amount that doesn’t reach your minimum. Keep in mind that this number should include additional factors as well. Such as the creation of a financial buffer and preserving enough of a margin to support the growth of your business. You don’t want to perish, but you don’t want to stagnate either.
To calculate this number you won’t even need to look at your competition. Every company’s burn rate is different. Knowing a competitor spends less in a month than you do doesn’t change your own situation. Likewise, knowing how much competitors charge won’t help you if your burn rate exceeds their potential revenue. Find out what’s necessary to your company and what isn’t, and make cuts accordingly.
Do Not Underestimate Market Analysis
Know your enemy like you know yourself. Not all agencies are created equal, and the client knows this. They are likely to a strike a deal with an agency catering to their specific needs at a reasonable price. This makes comparing prices across industry agencies difficult. With so many different services offered, comparing your own agency to others is like comparing apples to oranges. For example, some agencies focus on SEO or offer social media specific services, and this can affect their rates.
Be efficient in your research. Find the agencies that are an apple, like you. Focus on their size, the services they provide and where they’re located. A downtown New York-based agency is not going to have similar expenses to yourself, so try and keep it local.
Once you’ve done your research on these direct competitors, you can take a look at their pricing and service list. You now know how to stand out in both these areas to potential clients. Make it a habit to revisit this research every six months to update your findings and adjust pricing. It’s a fast moving business and you need to stay on top of industry trends.
Focus On Value, Not Dollars-To-Minutes
As an agency, you don’t want to come across as a hired gun. Even if you oftentimes are. If you’re discussing business with a potential client and throw a monetary value at their project, you’re going to be seen as a commodity. And commodities can be replaced with a cheaper version. You want the work your agency does to register as a mutually beneficial partnership.
In essence, there are two ways you can provide value to a client. You can bring in revenue or save them cost. Never talk to a client in terms of how many hours of service their money will get them. Try to convey the value they’re getting for that money, instead. Tell them what will get done and how it will benefit them.
To Publish Or Not To Publish
A potential client can and will find the pricing for the services they need in the area they’re in. You can’t escape it. But listing a few catch-all pricing schemes for service packages on your website isn’t always feasible or realistic. Every client is different and with some, you cannot make the guarantees you’d need to make.
Instead, create guideline pricing tiers to help your clients realize what bracket their needs would put them in. Having a range of pricing options with services and activities listed will aid both you and the client in getting the information needed for a successful business transaction.