Let’s go over some tips that’ll help you when it comes to agency pricing.
Figuring out how much or how should you charge your clients is one of the things that people get stuck on when starting an agency.
Luckily, figuring out how you should price your services is a lot easier than working out how to get results with SEO.
That’s because there are only a few basic things you need to worry about.
If you take care of these things, you should end up with a solid pricing model that delivers good profits.
All of which means you can relax a bit, and concentrate on other things.
…Such as how you’re gonna take down that competitor!
Let’s get started!
Section #1 — Picking a Pricing Model
When picking a pricing model for your agency, you’ll find there are four approaches that tend to be quite popular…
- #1 Productized strategy
- #2 Productized monthly recurring approach
- #3 Retainer model
- #4 Pay on performance method
There is no “best” approach here, as the tactic you go with generally comes down to personal preference and the kind of services you deliver.
Either way, let’s take a look at each of these strategies to help you figure out how it works, as well as which one might be a good fit for you.
The productized model
Okay, so the first approach we’re gonna cover is the “productized model.”
This is basically when you offer a certain service/deliverable at a set price.
Here’s an example of a pricing page based on this approach, from a company that does “PowerPoint Slides” for people.
Of course, this example doesn’t apply to SEO, but you can still use a similar approach for your firm.
So, if you have a link-building agency, you might set the price for services so that people can buy links at a particular price.
You might offer a wide range of links, and you could price links based on the link quality.
This approach works really well because clients know exactly what they’re getting for their money.
If you don’t know how much will costs to produce a certain deliverable, you might end up with small margins or you might even make a loss.
If you oversell things here, you might end up with a lot of angry clients.
This could then hurt your ability to have recurring clients.
That said, if you go in another direction and you can actually deliver things much faster than what you’re promoting, it could still be an issue.
You might lose out to competitors, as people might go with someone that offers the same outcome, in a shorter time frame.
If you’re gonna go with this approach, you need to have a solid understanding of what you’re actually capable of delivering.
You also need to make sure you have a dialed-in process that’s actually gonna produce consistent outcomes.
The Productized “Monthly” Approach
Another way you can price your services is by using the “productized monthly approach.”
Now I know, that’s a bit of a mouthful, and we could cover this in the earlier section…
But, because of the “monthly” thing, I think it deserves to be separated out, and you’ll soon see why.
Ok, so basically, with this method, you’re gonna use the productized model we covered earlier…
But, you’re not just going to offer a single “one-off service/result.”
Instead, you’re gonna go with a recurring model that basically delivers a specific outcome, for a certain number of months.
For example, if you sell links, you might sell a “6-month link package.”
The client will then be billed every month for a set number of links.
… And the quality/quantity of the links associated with this package…
Will be listed when the client actually buys the package.
This approach can work really well because, it can help you lock in some future revenue, and this can give you some peace of mind.
If you like the idea of using this strategy but you’re a little worried you can just start out with the standard “productized approach.”
If you’re able to deliver results using that tactic, you can then think about introducing this pricing model. Perhaps upselling your clients so that they buy into a monthly offer.
The Retainer Model
Another option you might wanna go with here is the “retainer model.”
This pricing strategy isn’t as strict as the other options we’ve covered, and a lot of agencies use this approach.
If you use this strategy, you might charge clients a certain amount of money, and you will charge them this figure on a recurring monthly basis.
In some cases, you might also charge a “setup fee” on top of this.
Here’s an example from a graphic design firm that shows how this might be done:
If you use this approach for SEO, the client is basically just paying you to improve their rankings, and not necessarily for a specific deliverable.
Alternatively, they might be paying for a set number of “hours” and you then decide how you’re gonna use those hours to deliver SEO results.
After all, clients might expect specific deliverables for their own peace of mind.
So, that could include a certain amount of content, or links each month.
But, even if you deliver these things, you might still do additional work to improve the rankings of clients.
The Pay Based on Performance Approach
The final approach I wanna cover here is the “pay on performance approach.”
With this tactic, you’ll basically get paid for delivering a certain result.
So, if you don’t deliver the result, you don’t get paid.
Now, what counts as your performance fee, generally depends on the nature of your agency.
For instance, if you sell links, you might set things up so that you’re paid for every link you deliver.
The amount of revenue each link generates could depend on the DR of the link.
Some agencies like to charge a “base fee,” on top of the pay-per-performance fees they ask for.
This then helps them cover the costs of actually delivering on a project that uses this pricing model.
That said, some agencies go all out, abandon the base fee, and stick strictly to the performance fees.
This can help you win clients because they essentially face no upfront costs.
If you’re gonna do this, make sure you know what you’re getting into.
Section #2 — Automating Payments
If you’re gonna use any sort of monthly billing approach, it can be a good idea to automate payments.
This is because automating monthly payments will make things easier when it comes to managing cash flow.
Well, if your clients aren’t paying on time, that could mess up your entire project.
After all, if clients pay late, you might not be able to pay contractors on time.
This sort of stuff can obviously throw everything off balance, and it could even lead to you shutting down your agency.
If you automate payments, you can often minimize the odds of something like this happening.
Of course, you’ll need the client’s consent to do this, but this isn’t that hard to do.
You can just mention to them that you’d like to automate payments on your sales pages or just during your sales calls.
You might also wanna mention that clients can easily cancel this automation if they have any issues.
Most payment processors, such as Stripe, have specialists in “automatic charging” features that make it easy for you to set up recurring payments.
You can generally set this up in a few minutes, even if you lack technical skills.
Section #3 — Boosting Profit
You might wanna put some thought into how you’re gonna boost your profit margins.
In doing so, you may be able to earn more money, without necessarily having to do more work.
So where to begin?
Well, one thing you might want to look into is how you’re acquiring customers.
The amount of money you’re paying to acquire customers could be one of the main things eating into your profit margins.
For instance, suppose you’re using something like AdWords to acquire customers.
In this case, you will be able to improve your margins by switching to another ad platform with lower CPCs, such as Facebook.
If you can figure out how to get results with this platform, you may find that your Facebook ad campaigns cost less money.
At this point, you could turn off your AdWords campaigns and enjoy the better profit margins that come from Facebook Ads.
You might also wanna put some thought into how you can make more money from your existing clients.
After all, you’ve already secured these customers, and so in some ways, it could be better to just focus on how you can make more money from these people.
… Rather than putting tons of time, money, and effort into acquiring new clients.
You may also wanna review how you can make your processes more efficient.
This is a good idea because if you’re paying contractors by the hour, you could be able to dramatically cut costs if you can figure out how to improve efficiency.
Of course, the way you do this is gonna depend on the kind of work your contractors are doing.
Either way, you might wanna see if there are any tools that can help you speed up certain tasks.
You might even wanna review your SOPs to see if there are any, unnecessary, time-wasting steps that can be cut out.
Another way you can boost your profits is by outsourcing certain parts of your business.
I know this may sound a little odd because outsourcing work basically sounds like you’re adding an extra cost to your firm.
But, if you’re trying to grow your agency, you need to hire people at some point and these labor expenses can quickly become one of your biggest costs.
If you use outsourcing, though, you can get everything done, without having to hire anyone.
This is actually worth paying attention to because outsourcing work can be much cheaper than hiring a full-time employee.
As a result, if you use outsourcing, instead of hiring full-time employees, you might be able to lower your overall costs and improve your profit margins in the process.
By the way, I just wanna mention that my agency helps people outsource the link-building side of their SEO company.
If you’d like to learn a little bit more about how we can help, book a free consultation call with us at juliangoldie.com!
Section #4 — Don’t Forget Taxes and “Cost of Doing Business” Fees
When developing a pricing strategy for your agency, don’t forget about taxes, and the general “costs of doing business.”
If you don’t understand how taxes will affect you, you might end up with much lower margins than you anticipated.
This might then have a huge impact on how much you can pay yourself.
If you don’t calculate taxes properly ahead of time, you end up with a big tax bill after filing your returns, and this could eat up all your company’s savings.
This could then prevent you from expanding your business, and it could even impact your ability to pay employees/contractors!
If you have no idea how to calculate potential tax obligations, book a meeting with an accountant.
If you’re transparent with them, they can help you identify, and calculate any tax burdens you’ll face in the future.
Anyway, as mentioned, you also wanna make sure you’re aware of the general cost of business fees too.
This includes stuff like payment processing fees, or even just how much you might have to pay for certain tools/equipment.
Again, if you ignore this kinda stuff…Your margins might be a lot lower than you expected them to be when you finally crunch the numbers.
Ok, so that’s a basic overview of how you can approach SEO agency pricing.
It’s important to remember that, if one approach doesn’t work out, you can always switch things up, and use a different tactic.
The main thing you need to focus on is, setting things up so that you’re running an agency that has healthy profit margins.
If you don’t make this priority, it will be difficult for you to deliver high-quality work in a timely fashion.