The Pros & cons of PublisheD AGencY PricinGHow to Determine If Publishing Pricing for Marketing Services Is Right for Your Agency
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The Pros & cons of PublisheD AGencY PricinG.
WRItten BY SHAnnon JoHnSon
Shannon is an Inbound Marketing Manager
at HubSpot. She works closely with the
agency sales team to ensure the educational
resources HubSpot publishes meet the
needs of agency marketers. She’s an
Arizonan-turned-Bostonian, a dog lover, and
an ASU alum who likes to dabble in digital
photography.
follow me on TwiTTer.@shAnnoPoP
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conTenTs.
truSt: tHe AlMigHty cAtAlyStfor trAnSpArent pricing.
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The cons of PublisheD PricinG.
The Pros of PublisheD PricinG.
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The TAkeAwAY.17
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There’s a certain mystery to what ingredients truly comprise a
Taco Bell Gordita Supreme. Likewise, “There’s a certain mystery to
billable hours and agency services,” says Paul Roetzer in his book,
The Marketing Agency Blueprint. “Clients are not always sure exactly
what they are getting or what it costs. This works for agencies because
billable hours are an imperfect mix of art and science, and as long as
the agency produces results, clients are happy,” he says.
Bad things happen when clients start to feel like they’re not getting the
results they were promised, though. According to Paul:
All of a sudden, invoices are being scrutinized a little more
closely. The client’s CFO takes a keen interest in the growing
monthly expense, and now the CMO has to explain the value
of the agency to his executive team. The problem is that he
has no idea. After four months of $10,000 per month, he has
invoices full of activities, but nothing tangible to share with his
bosses to justify the relationship.
Over time, the lack of transparency in pricing per deliverable becomes
detrimental to the client-agency relationship because the client
inevitably starts to question what they’re getting for what they’re paying.
truSt: tHe AlMigHty cAtAlySt for trAnSpArent pricing.
“”
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Soon after, trust in the agency begins to evaporate, and the client
becomes more skeptical of the advice they’ve been paying gobs of
money to take into account.
As an agency, how do you engender enough client trust to prevent a
perception of dwindling value? The answer for some agencies has been
to develop transparent, line-itemed pricing models that are published
right on their websites for any prospective client to see.
But is publishing pricing right for you? There are costs and benefits
associated with both options. Let’s discuss them and get some
perspective from agency marketers on both sides of the coin so you
can make an educated pricing decision for your own agency.
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tHe proS of publiSHeD pricing.
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“
John McTigue, EVP and Co-Owner at an enterprise inbound marketing
agency called Kuno Creative, is one agency executive who is gung
ho about transparent pricing. Even after much “back and forth on
the visibility of [Kuno Creative’s] pricing over the years,” the ultimate
decision to publish some of their pricing has done wonders for their
business. In a 2011 blog post, John wrote:
We have decided to publish pricing for our two main services,
inbound marketing services and HubSpot [CMS] design.
Our view is that transparency will help us win in competitive
situations and help to pre-qualify our customers before
we commit time and resources to sales consultations. We
feel that the ability to improve customer conversion rates
outweighs the sheer number of opportunities. We recognize
that open pricing may help the competition to some degree,
but we’re not obsessing about that. Our focus is on problem
solving, delivering and customer success. Those factors will
drive both revenue generation and profitability.
Nowadays Kuno Creative has starting prices listed on their site for
ongoing inbound marketing services including paid search, social
media, blogging, content creation, website design, as well as their one-
time offering -- an assessment and strategic marketing plan.
So, why might you want to take after Kuno Creative?
”
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pro #1: Differentiate from countless other Marketing Agencies.
If you were to go read a random assortment of “About” pages from
marketing agency websites, you would likely find a lot of descriptors like
these: “innovative,” “unconventional,” “results-oriented,” “integrated,”
and “full-service.” With so many agencies swimming in a sea of
sameness, differentiation must manifest itself in every crevice of the
business -- pricing included. When the vast majority of marketing
agencies position themselves as pie-in-the-sky, we-do-everything firms
that base pricing on the legacy billable hour, why wouldn’t you want to
become, say, the pufferfish among a homogeneous school of salmon?
Inbound marketing agencies like Kuno Creative, PR 20/20, and
Impact Branding & Design are the pufferfish. They stand out by not
only providing ongoing, measurable inbound marketing services in
the first place, but packaging and pricing them in a way that makes it
refreshingly easy for prospective clients to understand what they’ll get
for their money. From the beginning.
Clients who are accustomed to paying for hours spent on nubilous and
sometimes ineffective marketing tasks often find the accountability and
transparency associated with published pricing quite alluring.
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pro #2: Shorten the Sales cycle by Avoiding prospects who can’t Afford you.
According to Patrick Campbell, the Co-Founder & CEO at Price
Intelligently, a software company that helps organizations master their
pricing strategies, “Publishing pricing allows you to instill confidence in
your prospects, as well as streamline the whole process for your sales
team because you’re essentially rooting out those clients who can’t
afford you anyway.”
John Bonini, Director of Marketing at Impact Branding & Design, agreed
when he explained why his agency has their pricing out in the open:
The main function for including pricing on our website
was to help assist in the shortening of our sales process.
Prospects now have a general idea of what to expect, as well
as what goes into the pricing strategy for developing and
executing their inbound marketing campaign. This allows our
sales team to spend less time on a connect call discussing
price, and more time discussing challenges, goals, as well
as the background information essential for furthering the
relationship.
What could your business development and strategy teams do with
hours of recovered time?”
“
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pro #3: improve client-Agency chemistry by Allowing prospects to Self-Select your firm.
Transparency in pricing is about turning away the wrong clients, not
just turning away prospects who can’t afford your marketing services.
While published pricing may repel some prospects you coulda-shoulda-
woulda taken aboard, it may attract others who better jibe with your
agency anyway. Why? Because by the time they contact your team,
they’ve already done enough homework to determine that your agency
offers the services they need at a feasible price.
They’ll appreciate the time you saved them trying to get a pricing
answer out of your biz dev representative, just as your team will
appreciate not having to despairingly schmooze them into the next
stage in the sales process. Another big plus: your agency gains the
power to decide if you’d actually like to work with the client. Better
client-agency chemistry makes for better, longer-lasting, and more
profitable relationships.
Now that we’ve covered the major benefits of having pricing exposed
on your agency’s website, let’s change gears and see what the
opposition has to say.
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tHe conS of publiSHeD pricing.
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On the other side of the fence from John McTigue over at Kuno Creative
is Tiffany Sauder, President of Indianapolis-based Element Three, who
says the agency doesn’t -- and probably never will -- publish their
pricing:
We don’t want people to buy the things we do; we want
them to buy the impact we have. Published pricing makes
the conversation with the prospect too focused on tactics
from the onset, and we all become tactically obsessed and
strategically blind.
The team at Element Three prefers to have a conversation with a
prospect before arriving at the pricing discussion. That way, when the
work begins, they can focus on achieving results instead of checking
off a list of tasks. Furthermore, they avoid leaving money on the table
from potential clients who might be willing to pay more. If a client has a
budget for an ongoing retainer that happens to be twice as large as your
agency’s biggest offering, would you want them to turn away before
talking to you? Probably not.
“”
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x
con #1: published pricing Sets a cap on profit Margin.
Some dissidents argue that when you set even a base price for a
particular service, you immediately place a cap on potential profit.
Blair Enns, agency consultant and author of The Win Without Pitching
Manifesto, puts it this way:
Would you charge the Chevrolet division of General Motors
the same for a logo redesign as you would charge Bob’s
Chevrolet Dealership in Des Moines, Iowa? The answer is
no. Or it should be no. The reason the answer should be no
is because the impact of your work would have more value,
and there needs to be a certain amount of sting with your
pricing. Just the right amount. One of the challenges with
charging too little is that it becomes easy for your clients to
lose respect for you, and afford to pay for your advice and not
take it.”
“
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con #2: published pricing exposes your Agency to price Shoppers and competitors.
If you put your pricing out in the open, you do run the risk of
competitors copying your approach. Additionally, prospects can shop
around and compare; giving them ammo for strongarming you into
decreasing your price. Transparent prices may also invite the wrong
conversation with the wrong people, wasting your sales team’s time
on qualifying people who care less about outcomes and more about
getting a good deal.
One reason Todd Hockenberry, founder of marketing firm Top
Line Results, doesn’t publish his pricing is to avoid these types of
conversations:
If somebody leads a conversation with me about pricing and
says, ‘This agency was going to charge this much for this
service; will you change your price?’ I’m not really interested
in that conversation because that person is obviously just
price shopping. I’m looking for people to come to me and say,
‘I’m not growing my business fast enough; my sales team is
not being effective enough; our marketing dollars aren’t giving
us a good return; how can you help us grow our business in
an expanding global market?’ Those are the problems we
solve.
“
”
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con #3: published pricing commoditizes the Marketing Services business.
Dissenters of published pricing also insist that revealed pricing sets the
stage for the agency to play the role of a vendor instead of a trusted
partner. The health of the client-agency relationship becomes too
heavily dependent on the completion of a defined volume of tasks (a
certain number of blog posts, ebooks, or hours managing social media
channels, for example) instead of doing whatever necessary to create
value and drive results.
Here’s what Todd had to say about it:
[My job is] all about business results first. My job as a
consultant is to figure out what tasks we need to do. If I can
do two blog posts for a clients a month to get them the leads
and results they’re looking for, why would I sell them seven
or eight blog posts? I wouldn’t. But if I decided to, I would
base my fee increase on the results, not on the work I was
doing. As soon as you base your fees on the work you do, it’s
a task checklist, which lets your client focus on whether you
did everything you said you were going to do instead of the
results and value and benefit to the client.
So, if you want the flexibility to only do what’s required to meet a goal,
itemized published pricing might not be ideal.
“
”
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After exploring the most common pros and cons of publishing agency
pricing, hopefully it has become much more clear whether your firm should
or shouldn’t reveal what you charge. If not, here’s a simple way to think
about it.
You May Want to Publish If...
• You think transparency and openness outweighs your
competition’s ability to price competitively.
• You make a large enough margin on your established prices.
• You mostly offer repeatable inbound marketing services, and
find that you’re offering a similar service package to more than
3-5 clients.
You May Not Want to Publish If...
• You don’t yet know what to charge.
• You aren’t currently offering easily bundled, ongoing inbound
marketing services.
• You play more of a consultative role and offer higher-level
strategic work rather than execution.
No matter what you decide, just remember that placing price tags on
your website does not replace the need for an upfront inbound marketing
assessment or an effective sales methodology. Selling is essential, even if
published pricing minimizes the length of the sales cycle.
tHe tAkeAwAy.
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