Hello tech and non-tech people! Welcome back to our channel! Today we're going to
talk about how to price your agency services to maximize your profit. My name is Ruben. Let's
go! This video is brought to you by 10Web, a managed hosting platform on Google Cloud
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Before we start, if you're interested in topics, like Agency success and Online Presence
,make sure to ''Subscribe'' to our Channel, where you will find all the secret tricks
for managing your clients Website and bringing the best quality to your product ! Now there
are 4 popular ways to go about your Agency Pricing. You might have heard about the first
3 in our list ,but the last one is going to be quite a surprise , as it's a rather new one.
The most common Agency Pricing model, that comes to mind is the Project-Based one:
this is when you charge a fixed price for each of your projects.
For instance, if your client asks you to design a Landing Page, you charge them a fixed price,
after the Landing Page is ready, no matter how much time you spend on creating it .So let's say,
if your fixed time is equal to an hourly work of one week, but your team manages too finish
the project in say 2 days, you will get a huge revenue from it, but if your project ends up
lasting longer, than expected, you will end up losing additional hours and money.
Next one is Hourly- Based. And this one is pretty straightforward : you charge your client based on
your hourly rates, which makes it easy both for you as an agency and your clients to estimate the
expenses, and there are 2 main options for this pricing strategy :Blended rates and The Specialist
rates. Blended rate is when the hourly rate of all of your agency's employees is the same , and
The Specialist rate is when you charge different rates depending on the level of professionalism of
the work required . The main disadvantage of this model is that it's pretty rigid,
which means you can spare your employees with additional perks and benefits,
when they show exceptional performance. So, as an agency you risk that your work will be undervalued
.Next is Value Pricing :this type of pricing just like the project-based one doesn't depend
on hourly rates and offers more scalability, but if you want to go with this one you,
first need to get a solid understanding of your client: what their ultimate goal is and
the current situation in their business. Say for example: your client is aiming at a 25%
revenue growth. Your job is to guarantee ,that your agency will make that happen.
Once you gain your clients trust, then you can ask for the preferred amount of money you want
,because at that point your services will be of high value to your client and they will be
willing to invest in them. Notice however, that this pricing model is the hardest one to sell,
because your end result has to be really tangible in order to show your client,
that your services directly influence their business success.
The last pricing model in our list is the Milestone -Based Pricing : this is when the
Agency and the Client agree, that the Agency needs to achieve certain results within a certain amount
of time. In this case your Agency will receive the fee, whenever the Milestone is reached .The fee is
calculated based on the total amount of time spent on the project and everything else done to achieve
that Milestone. But there is one big downside to this model : there are no fixed prices here. This
means, that the fee calculation alone can be a headache, because different Milestones require
different amounts of time and resources, and your clients should approve the total sum for each
Milestone before they pay. Now that we figured out ,which are the pricing models out there, it's time
to understand how and when you should charge your clients. We'll give you three popular options:
Upfront: this method is the most popular one for Value-Based pricing models and it is certainly
the most convenient one for agencies .It's as simple, as it sounds: your client basically
pays the full amount of money upfront, before your agency even begins to work on the project
.The next option is charging On Completion: clients of course welcome this type of
payment solution more, because that way they can make sure they're happy with the agency's
performance before they pay. For agencies though this is not the most preferable one,
because there's always the risk that your client will be dissatisfied and refuse to pay you unless
you renegotiate and redo the whole work. If none of the above mentioned methods work for you,
you need to find a middle ground. So, if you go with the 50% upfront and 50%
on completion pricing method, it will give both sides a Security Net. This way you will
get your deposit while the client will get some control over the project output .Now,
once you've chosen the best agency pricing scheme that fits your goals it's time to optimize it to
increase your profitability. One mistake a lot of agencies tend to make is Over Servicing: this is
when an Agency puts an extra amount of time and effort unnecessarily just to show their clients,
that they're dedicated and reliable. But what in reality this leads to is wasting potential. But
''How can hard work be a waste?''' you might ask. Well, it can be, if you make your employees work
extra hours for nothing, if you're not even sure you're going to build that afterwards. So, this
way you undervalue the price of your work also showing your clients that you need to work extra
just to fulfill their requirements. At the end of the day this does more harm than good. Next
is Outsourcing. Outsourcing allows you to get high quality work at a relatively lower cost,
as you don't have to specialize in a field that's foreign to you. Plus you get the job done,
professionally, without having to worry about any employee related costs, such as training costs,
salaries or benefits. Finally our last tip for maximizing your profit is to Upsell.
Upselling is when you persuade your clients to upgrade their current package. This is done by
either making them choose your premium version of your services or by simply extending the list
of the services they purchase. Why is this a great way to increase your profitability? Well,
because it's always easier to upsell to an existing client, than to sell to somebody,
who doesn't know your agency or your services. And that's it for today you guys!
Now you have a list of pricing models. You can practice 3 popular options for charging your
clients and some useful tips to get the most out of your business .Try them out and let us know
in the comment section down below which pricing model worked for your business the best! See ya!