How do you go about charging your clients for the services you provide? In episode 243 of Journey to $100 Million, listen in to Erik as he explains the different pricing recipes almost every agency owner follows.
Most agencies start off charging by the hour for their services, maybe $50-$75/hour. The reality with hourly wages is that you are working your tail off, without gaining all of the monetary value you are expecting. The next step would be to charge by the project. With that, you take on a risk with a fixed price project, having to deal with administrative burden, defining a scope of work, as well as having to deal with change orders. Most agencies like to avoid all the weight that comes along with per-project pricing, so most owners move away from that and go into pricing like retainers and recurring revenue.
How do you price recurring revenue? You could price based on the value you are delivering due to your skill set/time, based on what the market says the value is, or you could charge based on what the client believes the value to be. If you can find an offering where the value you give is lower than the value the client believes they are receiving, you can charge more! Most people are starting to see this strategy, thus leading the majority of agencies towards the recurring revenue model.
Think about the progression of your company, and where you are at with pricing. If you are not sure how to go about pricing your services, start from the ground up, and move forward as you grow!
Erik J. Olson is an award-winning digital marketer & entrepreneur. The Founder & CEO of Array Digital, he is also the host of the Journey to $100 Million Flash Briefing and daily podcast, and the organizer of the Marketers Anonymous monthly meetups.
Kevin Daisey is an award-winning digital marketer & entrepreneur. He started his first company when he was just 23, and is the Founder & CMO of Array Digital. Kevin is the also the co-host of the Journey to $100 Million Flash Briefing and daily podcast, and the co-organizer of the Marketers Anonymous monthly meetups.