Setting agency pricing & expectations

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Anyone have any tips on how to set prices for agency clients - and the correct verbage to use about the monthly fee versus cost of provided support? :)
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D'nelle

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Posted 5 years ago

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Sam Rubin

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D'nelle:

I'm confused as to your question...

Are you currently an Agency and you have another Agency contacting you and wanting to procure your services?

Do you provide a full service solution?

Regards,
Sam
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Kari Chisholm

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Hey D'nelle --

We've been an Emma agency for a long time now. The most important thing is to communicate that you're not just a reseller -- that you're providing extra services that folks wouldn't get if they were a direct Emma client. Whether that's consulting, design, writing, or high-level support services.

That helps establish why your clients might pay more than they would by going direct. Better still, if you're able to set up a different pricing structure entirely, so that they can't do a straight apples-to-apples comparison.

At our firm, we do a lot of stuff that goes beyond email (website hosting, communications consulting) and so we typically have a big retainer that covers everything and we include a fixed number of "free" emails every month. Typically, I peg that number initially higher than they intend or are able to use.

I hope that helps.
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D'nelle

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Hi, Sam - yep, I'm an agency - I've been bumming around my account since 2007/8 or so.

All of my clients are REALLY tiny... I'm generally always thinking about how to be most efficient and affordable for them. My current pricing structure is:

Low-volume user option
$15 account monthly account maintenance + $0.04/per email sent

Monthly, #-of-contacts-based user option
$25/month for up to 1,000 contacts, unlimited emails
$35/month for up to 2,500 contacts, unlimited emails
$60/month for up to 5,000 contacts, unlimited emails
$70/month for up to 10,000 contacts, unlimited emails
$130/month for up to 25,000 contacts, unlimited emails

I based this off of the per-email rate that I am charged, keeping in mind the very low number of audience members my clients tend to have, as well as their personal usage versus my full-service solution.

Thank you for the phrase full-service! I will be using that LOL

Kari - generally, my approach has been to charge as little as possible so that the real value (to the clients and for me, really) is found in my working collaboratively with them to manage their accounts. All of my clients are hands-on and want to be up in their own accounts, but they always need my help cleaning up.

The original question here was borne out of a curiosity about other agencies pricing philosophies (THANK YOU - your response is really helpful, actually!), especially given that Emma themselves have changed their pricing structure over the past few years.
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Sam Rubin

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D'nelle:

I would echo what Kari said about showing "value add".

Just like Kari we've been an Agency for as long as we can remember. Our "niche" is that we primarily focus on the restaurant industry and are 100% full-service. We've been in the email marketing field since 1997 and have found the "breakage" rate among Clients can be much higher if it is a "do-it-yourself" type of arrangement (Clients rarely have time to do the work themselves and therefore it is the first line item to be eliminated during budget evaluations).

We too have had to position ourselves against the other email marketing companies like Constant Contact (or even to some extent EMMA) that charges based on "database size" and not volume. Instead of comparing "price vs. price" we show the value we bring and therefore the cost justifies what we provide.

As an example, if someone goes with us they will receive a full-service email marketing platform (including design/coding/etc.), sms/text marketing, custom branded Facebook Applications, interactive surveys (more "high-end" than the EMMA platform), and design/hosting of their mobile friendly website.

If a Client went with another company, in most cases they would have to contract with multiple companies (EMMA for email, WooBox for Facebook Applications, CMS Text for sms/text marketing, SurveyMonkey for surveys, and Weebly/Wix/etc. for mobile websites). Putting the cost aside, now the Client would have to facilitate/manage all these different platforms and "do-it-themselves".

When a Client utilizes our services one phone call/email/text gets everything done and turned around within hours--allowing a Client to spend more of their time focused on running their business. We like to refer to ourselves as the "General Contractors for Digital Marketing" (because when a Client built their business they normally hired a General Contractor to handle all the details (water, electrical, technology, etc.)--so why not with marketing.

When you show the "value" of what you bring to the table and the time/money that you will save them (not to mention the results) then the discussion of price/cost is much less important. If you just pitch "price" then you will lose almost every time.

To answer your original question more directly, we try to run around a 15% - 22% cost of goods for the email (as a general rule of thumb mark up your Agency rates by 5x). This may seem "high" but again, remember the "value" you bring. We also set a sliding scale (think of it as a utility).

As an example, if a Client had a database of 2,000 people and they currently send two blasts a month (forget birthdays and opt-ins) then we would structure a scale as follows:
0 - 2,000 emails a month: $50
2,001 - 4,000 emails a month: $90
4,001 - 8,000 emails a month: $130
8,001 - 10,000 emails a month: $150
*These are not actual prices, but just an example!

So based on the above if the Summer months require more "marketing" (just like air conditioning) then they pay more... in the Winter months when they are already busy perhaps they send less and the price goes down.

Also, as a full service Agency we always like to stress the Client's time. In our qualification process we always try to determine how much time a Client spends on their Digital Marketing a month. In most cases it is 5 - 10 hours a month. We ask them if they had to break down what their time to the hour what would they estimate their "hourly wage" be... in most cases they'll say $15 - $30/hour... so we show them that if we did everything for them not only would they save TIME to focus on other more important issues (that they are no doubt better at) but we'd also save them money because if it took us 10 hours and they were in the 4,000 - 8,000 clip level then they would be paying us less than what it would cost to have them to do (and the results would be better).

Sorry for the long response but in summary... sell VALUE not PRICE.

Regards,
Sam Rubin
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Just Write For You

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I appreciate what has been discussed in this thread but I'm looking for a little more specific guidance about setting pricing for various types of clients.  I'm preparing to present an email marketing service to potential new clients, but the types of businesses and scope of services would vary quite a bit. Would anyone be willing to share actual dollar amounts you charge for your services and how you arrive at setting your prices? I want to offer an affordable and valuable service that is in line with market standards (which I know vary according to geographical location and city/community size and industry).   Also, if you would prefer to answer via private conversation, we can work out a way to connect by phone/email.   Thank you in advance!!!
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BIPI

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Hi! I'd love to share with you what I do. You can see my very generic price structure here: http://berry-interesting.com/help-with-online-marketing/cost-of-website-management/ (click on "Pricing for email marketing management" to reveal the details). You can email me at hello@berry-interesting.com to talk strategy! I'd love to hear what you are doing and what your thoughts are.