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Your Guide to Pricing Your Agency

Your Guide to Pricing Your Agency

Pricing is important. Of all the decisions you have control over in your agency, the price you charge dictates so much - how you clients perceive your work, the viability of your agency and the flexibility you have to explore and develop great ideas for clients.

In this content series we will go through defining your agency pricing, how to set it up, with boilerplate examples based on what we have see work with successful agencies. We include posts on sales strategy and tactics section that gives you leading sales strategies from the world of SaaS that will help educate and inform your clients about the value of your work.

In this guide and series we will cover defining you agency pricing, archetype pricing structures for different agency types and sales strategies for subscription based agencies.

Defining Your Pricing

Cognitives gives you the capacity to set subscription prices. These come in two forms: the base client subscription and service pack/add on subscriptions. You define what goes into each type, but a client must have a base client subscription to get the service pack/add on subscriptions.

Think of the base plan like entry to the club, and the service packs are all the awesome cocktails you will dish up. They need to pay a base rate to get access to the best stuff.

Pricing strategy for SaaS agencies has been covered in depth on our blog so for more detail head over there.

The strategy we advocate, and one that leads to consistent month on month expansion revenue, is the land and expand strategy. The better placed you are to give clients a quality experience on an entry level service from the agency the better for three reasons:

  • This builds your sales pipeline quickly
  • Base plan expansion (moving up the levels) will occur, provided the plans are targeted appropriately (covered in the next section).
  • Cross sell opportunities provide you with another expansion vertical that you can throttle up or down depending on your capacity.

Positioning Matters

The way you position your agency matters and relates to your pricing, and the experience of your agency. The experience is defined by the way your clients experience your service across all touchpoints - your website look and feel, the way you answer emails, talk on the phone, deliver a presentation or hand over work. These anchor your pricing and set expectations.

The other positioning criteria to consider when thinking about your pricing is Category, Service and Market. These criteria often transcend your individual services, so as price pressure is put on specific categories, it is important to always reframe these for clients, to keep the value/price equation right (more on that in the sales section).

For example SEO services are now so heavily commoditised, that it is difficult to have high margin subscription packs but categories such as marketing automation, inbound marketing and content marketing have retained a generally higher price perception in the market.

The category your agency is in can also anchor your positioning in market and define how clients perceive your subscription pricing. Creative agencies with strong reputations command very high, longer term subscription arrangements. Digital agencies are typically perceived to be more transactional, although this is changing. Consider the language you use and how this can define pricing and contract expectations with clients.

Finally your market defines your price/positioning equation - this can be a boon if your market gives you the strength to defend a premium pricing strategy, particularly if you sell outside that market. Agencies in the valley that have tech clients often do this. Another case is the market you serve may define your pricing capacity. An agency we have worked with serves the rural brand market exclusively. This means that typically the clients have a lower propensity to pay, but are more loyal, giving the agency more reliable revenue over time.

Pricing Strategy

Figure out what is on the menu at your agency.

In this section we will go through a range of scenarios for different agencies types and how to  set up their plans and service packs to deliver the best value to clients and provide maximum growth potential. This is based on many conversations we have with agencies around what they feel works and how they position themselves in the market.

Each one of these can be tailored to your needs or you can slice and dice them for alternate agency brands you may run.

Before we jump into the detail around pricing of agency services, we recommend looking over the value based pricing video prepared by Amy from Cognitives. 

Value based approach to pricing.

This mindset when considering pricing is what we recommend for all agency partners.

Value based pricing is simply setting your prices based on what they customer values, rather than the cost of production. This ties strongly with a subscription based agency model. Unless you can effectively break the time based billing relationship with clients, you are always anchored to a cost based negotiation on price.

How Plans and Service Packs work in Cognitives?

You have a range of options to set up your agency billing in your white label platform. The plans and prices you select should reflect your agency - remember, your clients only see your prices not ours.

The steps are:

  1. Pick a base plan. This is linked to a cognitives plan.
  2. Build your version and mark-up the price. You can create as many plans as you like.
  3. Create add on packs for additional services

Content Marketing Agency

The base services of a content marketing agency are typically focused on the content related Jobs to be Done by a client - but remember the number one reason people think content has a strong ROI is because of its accretive, and compounding, lead generation potential.

The pitch here is that content marketing is most effective when you focus your efforts on building an audience on a channel you own.

Quantifying and expressing the value of that audience over time is important to building the value perception of an ongoing subscription.

Base Plans

These base plan examples would provide a client the baseline of support and platform access to take on increasing content marketing related challenges; from running a basic blog to creating a full blown brand publishing venture.

The design of these packs is specifically aimed at driving expansion revenue per client in a content marketing agency. Content agency service retainers typically are mapped to time. Time doesn’t necessarily equate to value and you are constantly chasing the tail of value versus time.

The pitch here is that content marketing is most effective when you focus your efforts on building an audience on a channel you own. Quantifying and expressing the value of that audience over time is important to building the value perception of an ongoing subscription.

 These plans are designed to be delivered with a custom suite of service packs.

Read More about setting up Content Marketing Service packs in our Guide to Service Pack Design for Content Marketing.

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