The access to information online has transformed industries.
How we buy travel, music, movies, cars, clothing, and insurance… even food … has changed.
It’s easy to compare products online. You can read reviews and check prices.
Review sites, such as Yelp, Angie’s List, and Service magic make comparing services quick and easy.
Yet, comparing professional business services remains a more difficult exercise.
Traditionally, advertising and marketing agencies used a cost plus approach to pricing. They estimated the number of hours a project required and then added overhead and profit to the hourly billable rate to arrive at a price.
The “cost plus” approach which basically backs into a billable hours pricing model leads to questions in your mind as a client. You always wonder: “How is the time allocated to the project being used? Will the time spent deliver results and value?”
But, pricing of marketing services is evolving.
A more collaborative, transparent approach to pricing marketing services is value-based pricing.
With value-based pricing, both the agency and client agree to invest time and energy in research and defining clear objectives of the marketing strategies and executions. Often times, the marketing agency will charge a fee to conduct this research.
With a value-based pricing approach, you can expect to receive, and should collaborate on:
- A Scope of Services Offered: This includes a list of the main services or campaign packages offered and what activities are included within them. Give them a scope.
- The Perceived and Actual Value: Regardless of time spent, some marketing services deliver higher perceived value than others. For instance, you lack the time to execute a comprehensive social media campaign. Services such as Social Media, specialized Content Creation, and Video Marketing are in high demand. High-demand, high-value services will cost more even if they take less time than other services.
- Reach Agreement on Scope and Price: The marketing agency and the client agree upfront on the scope of the project and the associated price. If the proposal price is beyond your budget, ask the marketing agency is the scope of the project can be limited. Reaching a clear agreement on the project scope and price eliminates misunderstandings and friction as the project progresses.
- Revisit pricing if scope changes: If you need to change the project scope, always refer back to the original agreement from the marketing agency. Ask for updated pricing options if needed.
As you can see, there is no one set price. Each project and client engagement is based upon the client’s needs and input.
So, how much will marketing services cost?
It depends on an open, transparent communication up-front with the marketing agency.
Perhaps the more important question is not what marketing services cost, but how much ineffective marketing is costing your business in lost sales and revenues?