Optify: how to price your digital marketing services
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This document discusses pricing methods for digital marketing services. It presents four common pricing models: time and materials, fixed bid projects, retainers, and value-based pricing. For each method, it outlines the description, pros, cons, and typical opportunity types where each method may apply. The document provides examples and considerations to help digital marketing agencies determine the most appropriate pricing approach for different types of client engagements and projects.
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Optify: how to price your digital marketing services
- 1. How to Price Your Digital Marke3ng Services
- 2. Speakers Rob Eleveld, CEO, Optify Rob Eleveld, CEO of Optify is a 20-year tech veteran with deep experience in B2B sales and marketing. Rob is passionate about growing business through partner channels at Optify and excited about the opportunity that inbound marketing affords to forward-thinking digital marketing agencies. Follow Rob on Twitter - @RobertEleveld John C Stone III, Founder and CEO, Revenue Architects John Stone is the founder and CEO of Revenue Architects – a services firm that helps clients build innovation and new architectures for revenue growth. Prior to starting Revenue Architects, John was President of CrossTech Partners, a digital marketing agency, and held leadership posts at PA Consulting, Viant (digital business), AT&T and IBM. Follow John on Twitter - @jcstone3 Page 2 How to Price Your Digital Marke3ng Services | @op3fy
- 3. About Op3fy Optify delivers a simple digital marketing software suite for agencies. Our complete cloud-based software eliminates the need for standalone tools and empowers agency marketers to easily create and manage demand generation programs across multiple websites, nurture prospects, prioritize the best performing programs and streamline reporting of client results - all from one login. Optify, Inc 710 2nd Ave, Suite 840 Seattle, WA 98104 1 (206) 388-4234 (phone) 1 (877) 2-OPTIFY (toll-free) 1 (206) 787-1410 (fax) Sales: [email protected] Help: [email protected] Other Inquiries: [email protected] Page 3 How to Price Your Digital Marke3ng Services | @op3fy
- 4. Agenda • Pricing prerequisites • Four pricing methods • The service model • Final 3ps • Q&A Page 4 How to Price Your Digital Marke3ng Services | @op3fy
- 5. Poll Ques3on #1 • How do you feel about your current pricing ? Score your pricing maturity level: 0% 10% 20% 30% 40% 1. I’m just star3ng and not sure what the right pricing model for me 2. I’m really struggling with seTng it 3. I’m not sure if I have it nailed 4. I think it’s okay, could use some adjustments 5. I have it nailed down Page 5 How to Price Your Digital Marke3ng Services | @op3fy
- 6. Pricing Prerequisites – Cost Structure • Fixed & Variable • Margins • Create a baseline blended rate Page 6 How to Price Your Digital Marke3ng Services | @op3fy
- 7. Pricing Prerequisites – Market Condi3ons • Market prices • Price elas3city • Differen3a3on US UK Source: h_p://www.seomoz.org/blog/seo-‐pricing-‐costs-‐of-‐services Page 7 How to Price Your Digital Marke3ng Services | @op3fy
- 8. The Four Pricing Methods for Your Services Descrip0on Pros Cons Opportunity Type Time & Material Fixed Bid Project Retainer Value-‐Based Page 8 How to Price Your Digital Marke3ng Services | @op3fy
- 9. Time & Material Google server farm (source: VentureBeat) Pros Cons Opportunity Type Your firm maintains profitably if Client may begin to not include you Any project lacking 3ght defini3on scope increases, or the scope isn’t in key conversa3ons. Percep3on or deliverables. Olen clients will well understood. you are always “on the clock”. s3ll want at least an es3mate. Page 9 How to Price Your Digital Marke3ng Services | @op3fy
- 10. Fixed-‐Bid Project Pros Cons Opportunity Type Client feels they can budget a If you don’t ac3vely manage Good way to earn trust with a new project, so they olen prefer this expecta3ons and scope creep, a client on a small project, or a type of method. project can quickly become project you do olen. unprofitable. General rule: 20-‐30% premium for fixed bid Page 10 How to Price Your Digital Marke3ng Services | @op3fy
- 11. Retainer Pros Cons Opportunity Type Improved cash-‐flow visibility and Very few, except that you may Olen proposed aler trust resource planning. Clients can need to manage client expecta3ons established with ini3al project, or if budget a consistent number. so as to not let scope of services you have well-‐defined services and grow. client references (professional website, case studies, published pricing, etc.). Page 11 How to Price Your Digital Marke3ng Services | @op3fy
- 12. Value-‐Based Pros Cons Opportunity Type Usually much higher gross margins. Tougher to do repeatedly without Ongoing service or campaign where significant, tangible differen3a3on replacement cost would be a from compe3tors (defined headcount or more. deliverables, specific reports and/or (Note: a blended team could do that insights). too) Page 12 How to Price Your Digital Marke3ng Services | @op3fy
- 13. The Four Pricing Methods for Your Services Descrip0on Pros Cons Opportunity Type Time & Material Most common Your firm maintains Client may begin to Any project lacking services billing profitably if scope not include you in key 3ght defini3on or method for any type increases, or the conversa3ons. deliverables. Olen of engagement. scope isn’t well Percep3on you are clients will s3ll want understood. always “on the at least an es3mate. clock”. Fixed Bid Project Your firm commits to Client feels they can If you don’t ac3vely Good way to earn a fixed price. Services budget a project, so manage expecta3ons trust with a new firms olen build a they olen prefer this and scope creep, a client on a small 20-‐30% premium in method. project can quickly project, or a type of bid to cover risk. become unprofitable. project you do olen. Retainer A fixed monthly or Improved cash-‐flow Very few, except that Olen proposed aler quarterly fee for an visibility and resource you may need to trust established with ongoing service or planning. Clients can manage client ini3al project, or if campaign. budget a consistent expecta3ons so as to you have well-‐ number. not let scope of defined services and services grow. client references. Value-‐Based Pricing a service Usually much higher Tougher to do Ongoing service or based on gross margins. repeatedly without campaign where replacement cost or significant, tangible replacement cost percep3on of value. differen3a3on from would be a compe3tors. headcount or more. Page 13 How to Price Your Digital Marke3ng Services | @op3fy
- 14. Poll Ques3on #2 • How do you rate your service delivery process? 1. We’re just star3ng and don’t have a process in place 2. We have some internal processes, but nothing standardized 3. We have clear internal processes for delivering our service, but we don’t use them to price or communicate our service 4. We have clear and communicated process that our customers know and appreciate, but we don’t use it for pricing 5. Our delivery process and method is used both internally and externally and is the core of our service 1 2 3 4 5 15% 16% 15% 34% 20% Page 14 How to Price Your Digital Marke3ng Services | @op3fy
- 15. A Vision for Service Pricing 1. Our services are standardized and we deliver them effec3vely and efficiently. 2. Our services are perceived as high value by our clients and experiencing strong demand in the marketplace. 3. We easily scope and price our services profitability while delivering high levels of client sa3sfac3on. The problem is that clients want the latest advantage and skills, resources and methods constantly evolve! Page 15 How to Price Your Digital Marke3ng Services | @op3fy
- 16. So, what’s the answer? Service Model Solu0on Services Project Services SoluDon offerings that have a defined Custom project services that use scope and standardized pricing. standard phasing and methods. A service model helps you capture client value and adapt to a rapidly changing marketplace. Page 16 How to Price Your Digital Marke3ng Services | @op3fy
- 17. Service Model Benefits Sell Be;er Sa0sfy Clients Drive Profitability ü Clients gain ü Be_er align ü Teams work confidence in expecta3ons more efficiently our ability to ü Higher quality ü No reinven3ng deliver deliverables from the wheel ü Demonstrate consistent process ü Greater reuse services and ü Joint teams are ü Lower project approach clear on how to risk ü Can show work together ü Feedback loops sample for constant deliverables evolu3on Page 17 How to Price Your Digital Marke3ng Services | @op3fy
- 18. Building an effec3ve Service Model • Solu3on Services § Develop a services hierarchy aligned with agency strategy Solu3on level § Define specific service components, scope pricing model and value parameters § Align skill disciplines to service architecture. • Project Services § Develop standard “Work Architectures” Engagement level § Define phase entrance / exit criteria pricing model § Develop standard ar3facts, templates, tools and deliverables. Page 18 How to Price Your Digital Marke3ng Services | @op3fy
- 19. Example Solu0on Services Solu0on Service Example Scope Parameters eMail Marke3ng Program ü Number of emails per month ü Level of crea3ve ü Number of words ü A-‐B tes3ng ü … Lead scoring model ü Number of lead types ü Tool set for lead scoring ü Sales-‐marke3ng alignment process ü MQL vs SQL ü … Blog ü Number of words White Paper/ Premium ü Technical depth Content ü Graphics and visual design ü … Social Media ü Number of channels ü Follower and engagement goals ü Source of content ü Approval process and compliance ü … Page 19 How to Price Your Digital Marke3ng Services | @op3fy
- 20. Example Project Service Model 1 2 3 4 PHASE ENVISION BLUEPRINT EXPERIENCE LAUNCH Develop high-level Conduct analysis Conduct detailed Build, test, and roadmap, prioritize & requirements visual, functional roll out the system initiatives, & build gathering and technical business case necessary for design detailed design BENEFITS Clearly defined—and Well-defined scope of Well-defined scope of Well-tested, production- prioritized—initiative(s) functionality to design functionality to build ready, documented system Multi-phase roadmap Understanding of the Well understood—and problem domain validated—design Trained users Design foundation KEY Conduct brainstorming Assess current Refine requirements Construct the system ACTIVITIES workshop situation/capabilities Design and usability Conduct unit, Conduct market Understand audiences test features integration, and user- assessment acceptance testing Design technical Conduct prioritization Determine creative architecture Write documentation workshops (prioritize by strategy Create prototypes and Plan rollout and strategic objectives and Define requirements design explorations transition technical and operational feasibilities) Create experience plan Create style guide Rollout system and train users Develop economic model Create launch plan Page 20 How to Price Your Digital Marke3ng Services | @op3fy
- 21. Summary • Services change con3nuously, but a service model helps inform pricing and drive efficiency in the organiza3on • Incorpora3ng the service model discussion during the sales process improves client confidence and sets expecta3ons • Sa3sfied clients with higher quality delivery drives client reten3on and share of wallet • Evolve toward the vision state with repeatable service delivery and facilitate more accurate pricing. Page 21 How to Price Your Digital Marke3ng Services | @op3fy
- 22. Addi3onal Resources • Op3fy Pricing Blog Series: Optify, Inc § h_p://www.op3fy.net/digital-‐marke3ng-‐agency/new-‐blog-‐ 710 2nd Ave, Suite 840 Seattle, WA 98104 series-‐how-‐to-‐price-‐your-‐digital-‐marke3ng-‐agency-‐services 1 (206) 388-4234 (phone) § h_p://www.op3fy.net/digital-‐marke3ng-‐agency/goldilocks-‐and-‐ 1 (877) 2-OPTIFY (toll-free) the-‐agency-‐that-‐posted-‐its-‐pricing 1 (206) 787-1410 (fax) § h_p://www.op3fy.net/digital-‐marke3ng-‐agency/3-‐ways-‐digital-‐ marke3ng-‐agencies-‐can-‐use-‐pricing-‐as-‐a-‐compe33ve-‐advantage Sales: [email protected] Help: [email protected] • SEOmoz SEO agencies pricing study – Other Inquiries: [email protected] h_p://www.seomoz.org/blog/seo-‐pricing-‐costs-‐of-‐services • Op3fy Demo – h_p://www.op3fy.net/demo • Free trial – h_p://www.op3fy.net/sign-‐up Page 22 How to Price Your Digital Marke3ng Services | @op3fy