For any business owner, the first concern is to form sure that their business makes money. a bit like every other industry, competition is fierce within the world of digital marketing.

That only means you’ll get to have competitive prices in order that customers are interested in your agency. But you continue to got to make a profit so as to stay your digital marketing agency up and running.

Moreover, a profit may be a healthy incentive that each business requires to thrive and grow.

Which criteria should you use to decide the digital agency fee structure?

This can be one of the foremost challenging questions faced by those starting a digital agency. As a general business rule, the product’s price must be such it covers the value of the service rendered and therefore the overhead expense. In digital marketing, you’ll base your pricing model on the value of the precise services you provide.

But remember, your digital marketing agency pricing model can either make or break you. It can influence various aspects of your agency, from who you hire to how you pitch. So it’s imperative that you simply choose a pricing model that aligns together with your long-term goals.

Selecting a reasonable price

Digital agency rates can vary, especially those that outsource their work. They can afford to cut prices without dipping significantly into their profit margins. But how do you quote a price that is in line with customer expectations and covers the cost of running your agency?

Here are a few factors that will help you determine how much to charge.

1. How much does it cost to run the agency?

Several expenses influence this figure, such as:

• Office expenses- Whether you work from home or have a dedicated office, operational costs include rent, utilities, equipment, maintenance, supplies, etc.
• Production expenses- To run efficient campaigns, digital agencies have to invest in multiple tools and software. The list is endless, but common ones include office productivity software, task management software, CRM, SEO tools, email marketing, social media automation software, etc.
• Employment costs- Besides salaries, digital agencies need to take into account things such as benefits, insurance, and bonuses.
• Professional fees- Running a business comes with its own bucket load of expenses, from government licensing fees to corporate taxes to attorney fees. These should never be overlooked.
• Additional expenses- Every business needs extra capital to help it grow. Digital marketers need to allocate an amount that allows them to cover variable costs of marketing such as advertising, conference fees, directory listing fees, etc. This may also include travel and accommodation expenses. For others, it could also involve loan repayments.

2. The digital marketing agency pricing model you wish to implement

As a digital marketer, there are various pricing structures that you simply can use to charge your clients. Whether you opt to charge your clients upfront, 50 before 50 afterward, or on completion is up to you and therefore the services you’re offering.

Here are some of your options:

Pros: 

• Attract clients who are interested in extended services
• Long-term contracts bring a steady income

Cons: 

• Discounted annual rates can bring down the profit margin

5. Performance-based

When you’ve worked hard to create a reputation for your agency, and you recognize that you simply can drive positive results, consider moving on to a performance-based pricing model for your digital marketing agency. Of course, you’ll need the backing of the proper metrics to prove your efforts.

For example, you’ll agree upon a percentage of all sales the corporate closes.

Pros:

• Easy to scale
• Metrics can prove your positive influence on the client’s business

Cons:

• If you aren’t able to produce the right results, you don’t get paid

6. Value-based

Value-based pricing is based on the value you bring to your client’s business and the solutions you provide to their current problems.

Pros: 

• Easy to scale
• Clients know precisely the value they will get

Cons:

• It can be challenging to provide consistent value all the time
• Even after the best efforts, specific goals may not be met
• Can be a hard sell

7. Customized pricing

Digital marketing is an evolving profession. you’ll be ready to devise a pricing structure that gives services that cater to your clients’ specific needs.

Pros: 

• Allows you to analyze individual clients and tailor your services for them
• Clients can pay only for services they need
• Provide clients with more options, adding value to your agency
• Your services are very cost-efficient
• Accommodate everyone by implementing hourly rates and recurring revenue models.

Cons: 

• Clients may negotiate multiple services and bring down the profit margin

3. The services you intend to provide

Digital marketers who are establishing their agencies should also check out avenues that will help to grow the business. This includes considering to supply a spread of selling services. By devising a customer-oriented digital agency business plan, you’ll align your services with high demand.

Moreover, you’ll be ready to accurately price them in order that you remain profitable in the least times. The formula is simple: cost + markup = price. Most agencies charge a 20% to 50% markup. But how does one price specific services, like social media management, SEO, PPC, etc.? You’ll get to understand the prices and roles related to each service. And since all are different, let’s dive a touch deeper.

1. Social Media Marketing Agency Pricing

SMM helps businesses to attach with customers, build a community around the brand, leverage brand awareness, improve brand loyalty, boost customer satisfaction, and increase sales.

So you’ve got a comprehensive job that has analyzing the audience, then developing and executing a technique that aligns with them. It also involves ad management, one of the foremost important SMM services.

Social media management includes a spread of tasks. you would like to get on top of additional tools and staff you’ll got to complete them. as an example, an ingenious director, strategist, or video editor can up the extent of services you provide.

So when quoting a price, confine in mind the value, time, and value of your services that ought to encompass the following:

• Community management
  • Determining the ideal audience
  • Devising a campaign strategy that targets the customer persona
  • Understand the business goals
  • Connect with customers
  • Reply to comments quickly and appropriately
• Content creation
  • Create content that aligns with customer preferences
  • Organize a content calendar
  • Audit competitors
• Monitor conversations
  • Watch relevant hashtags and influencers
  • Increase reach by joining relevant conversations
  • Be aware of target keywords that are trending on various social media channels
• Working with influencers
  • Track companies, followers, products, and topics that align with the brand image
  • Filter out clickbait
• Analytics
  • Monitor, analyze, optimize, and report the metrics that matter the most in the SMM campaigns.

2. SEO Management

There are tons that go into SEO management, from the content to keywords to image metadata. But SEO are often weakened into three main types:

• Local SEO- how local businesses can appear in ‘near me’ searches.
• On-Page SEO- ensures all aspects of a website are optimized for search engines, such as images, keywords, URLs, page speed, mobile-friendliness, linking strategy, UX, etc.
• Off-Page SEO- activities are done off your website to raise the ranking with search engines, for example, links to your site from external sources, forums, influencer outreach, etc.

SEO may be a long process that needs constant auditing and maintenance. Besides content and keywords, SEO also focuses on ranking and traffic. As an ongoing service, so how does one price SEO services? for several, project-based pricing or a recurring model are preferred options.

3. PPC

Much like advertising, PPC may be a good way of getting your website ahead of individuals . That’s why many consider Pay-Per-Click marketing as paid SEO. lately, most of it’s done through AdWords. Your job is to strategize, set up, manage, and report on marketing campaigns on this platform. Progress is monitored, either weekly, monthly, or quarterly, and campaigns are tweaked accordingly.

There are multiple pricing models when it involves PPC services, starting from hourly rates to flat rate to a monthly retainer model. Others charge a percentage of the ad spend while some clients package PPC services with other digital marketing needs. At the top of the day, you would like to settle on a pricing structure that suits both you and your client.

So exactly how much should I charge for your services?

Now, if you were expecting a specific number, I’m sorry to disappoint you. This blog acts as a mere guideline on what to think about when deciding a price and ways in which you’ll charge your clients.

Every city and country features a different demand for digital marketing services. And only you’ll determine what the suitable margin of profit for running your digital marketing agency is.

After all, you’re investing a substantial amount of some time, energy, and resources into providing valuable services to your customers. Keeping your work profitable will serve to form your efforts worthwhile.

So let’s take a better check out a couple of reasons why digital agency fee structures can vary:

1. Firm/consultant experience

This factor has the foremost influence on the digital marketing agency pricing structure. The experienced workplace is, the more it’ll charge.

Consider the subsequent. once you hire an entry-level employee, you naturally pay them but an experienced one. Similarly, a digital agency that’s new within the market has less experience within the trade and doubtless takes longer to urge tasks accomplished.

On the opposite hand, a longtime, experienced firm has employees that have the required expertise to urge more work done better and quicker. therefore the more specialized and experienced you’re within the industry, the more you’ll be expected to urge paid.

2. Internal costs

As mentioned earlier, a digital agency’s individual operating costs define the bare minimum required to stay the business afloat. Larger agencies tend to be a touch less costly than smaller ones because they will tap into economies of scale.

Having said that, you ought to also confine mind that a private consultant may charge higher prices than the workplace because their time is finite. They specialize in a couple of clients rather than taking over a much bigger caseload.

3. Scope of work

Digital marketing campaigns can be billed at an hourly rate or services rendered. The more services a client needs, the greater the amount of time and resources you invest in completing the work, the higher the fee.

4. Industry-specific factors

Some industries are naturally more competitive than others. The more competitors within the industry, the greater the trouble needed to face out. therefore the budget required to dominate that industry are going to be far more . for instance , a high-end fashion brand will need more aggressive marketing than a niche-specific brand associated with organic gardening.

Final thoughts

Choosing the proper digital marketing agency pricing model are often overwhelming. So if you’re unsure of which one to implement or have already got a model in situ that’s not profitable for the agency, there’s no rule that says you can’t change it.

Taking the time to know the pros and cons of various pricing models can assist you achieve your goals quicker and guide your agency to subsequent level.