If you’re looking for the best agency pricing strategy examples, then you’re in the right place.
Pricing can be one of the most challenging things to wrap your head around. If you charge too high, prospects may go find someone else. If you charge too low, you’ll look like you can’t deliver results. So what’s the best approach?
To help you understand and build your agency pricing model, we asked Chat Marketing leaders to reveal their top insights on how to build sustainable growth for your business.
Top Three Agency Pricing Strategy Examples
Orca Marketology’s Four-Step Guideline to Agency Pricing
Because every niche has various pricing strategies for products and services, a guideline is a useful way to learn how to base each pricing option. First, never do it for free — ever. Get some sort of payment, even if you’re looking for your first client; you’re running a business, not a charity.
There are four things to consider when determining what to charge a client:
1. What services are you providing?
Are you just building a chatbot? Are you executing a full Chat Marketing strategy including Facebook ads, SMS, and email marketing? Will you build and hand-over? Or will there be ongoing maintenance and optimization? Get a clear picture of what the project scope is to access how to appropriately charge the client.
2. How complex of a bot does your client need to achieve their goals?
3rd party app integrations, external requests, and connecting APIs — specific functionalities like taking payments, scheduling, coupon distribution, and more — can give you options to adjust your pricing as necessary.
3. What is the lifetime value of a customer to the business?
Shockingly, many business owners don’t even know this stat for their own business! If you know the average ticket value of a customer, how often they return in a year, and how long a customer stays with your business, you can figure out the lifetime value.
Knowing what the lifetime value is for a business is vital in figuring out a good range to charge for your services. For example, let’s say the average lifetime value of a gym customer is $2,088. If your Chat Marketing services can bring the gym 15 new customers in a month, that’s an extra $31,320 for the gym each month.
With those numbers, and knowing that the U.S. Small Business Administration recommends small businesses spend 7 to 8 percent of gross revenue for marketing, you can easily charge $2,500 to $3,500 a month (including ad spend) and it will still bring you a decent ROI.
4. Time availability, expertise, experience, and past results.
As your availability decreases, and your expertise and past results increase, your prices can increase as well. If you want to make room for more clients, but don’t have room to increase your prices by much, bring more people on your team to free up work time.
To fully understand the answers to the first three variables mentioned above, it’s critical to ask in-depth questions on a discovery call with a potential client. Without knowing specifics about their business, you’re throwing darts with a blindfold on. So when you pitch your prices, it very well can miss the mark and they won’t say yes. Or, equally as bad, you way undercharge, then you end up kicking yourself afterward knowing you could have easily asked for more.
To learn more about this agency pricing model, check out the Get Chatbot Clients Masterclass. You’ll learn how to put together your services and pricing, outreach methods to get in front of new clients, discovery call tactics, and more.
— Mackensie Liberman, Founder of Award-Winning Chat Marketing Agency, Orca Marketology
Matt Plapp’s Working Backward Pricing Model
When it comes to pricing your services, the big thing for people to know is the problem they’re going to solve. If they’re going to charge someone $1,000 for something that’s going to be a $500 win to them, you won’t have a long-term relationship with them.
1. How much do you want to make this year?
I always tell people — from a greedy standpoint — as an agency, you should work backward. Say you want to make $100,000 this year, that’s $8,334 a month. That means you’ll need to have 12 clients pay about $695 per month.
That price point comes down to two things: your expertise and ability. If you’re charging over $1,000 per month for Chat Marketing services, you’re in the premium tier. People will expect a premium solution — make sure you can deliver on it.
2. Don’t be afraid of smaller monthly retainers.
When you’re picking up a client, look at their total lifetime value. Say you get a client for $300 bucks a month for 5 years, that’s $18,000. That’s more revenue than if you charged $2,000 for monthly service and only kept them for six.
3. Set up a multi-month agreement.
Even if you’re brand new, you can still get clients on retainer. Be upfront with them. Tell your client you’re building a digital agency, explain what you’re focusing on — for example, Facebook Messenger ads or video marketing — and tell them the tools you’re working with.
If you’re trying to get your first client, instead of charging $1,000 per month, charge $300. You’ll be able to learn on their dime, and the client will get good value and results. Then after six months, look back at the relationship and see if you want to move forward. Highlight how much they spend with you, how much revenue you got them, as well as audience growth, a database of warm customers, email, texts, etc.
At the end of the day, pricing your services comes down to who you are, what you can deliver, and how long you want a client.
— Matt Plapp, Founder and CEO of Driven Media Solutions and ROI Expert
Start growing your Chat Marketing agency today with ManyChat. It’s free to get started.
Mary Katherine Johnson’s Margin-Focused Pricing Strategy Example
Before I built my first chatbot, I was in Andrew Warner’s live webinar and asked him how much I could charge to build chatbots.
After a few “it depends”, he dropped the number $1,000 and I ran with it. I signed my first two clients, learned on their time, and three years later, my agency now charges:
- Minimum: $3,000 plus $1,500/mo retainer (webinar chatbot/eComm nurturing and segmenting funnel, etc.)
- Maximum (so far): $32,000 plus $29,000/mo retainer (full conversational marketing suite — MC, FB/YT/IG Ads, Social Growth, etc.)
Here’s how you too can build a sustainable Chat Marketing agency:
1. Define your mission as an agency.
The number one thing is to define your mission. I’m not just in Chat Marketing to make boatloads of money, I’m in it to impact lives and build relationships. If you’re looking for cold email strategies and outreach, I’m not your girl.
2. Solve one problem, and solve it well.
If you want everybody, you’re going to get nobody. It’s easy to try to be the best for everyone, but you can’t scale with that model. You want to focus on a niche. Niches don’t have to be one industry either: it can be a channel or marketing tactic your clients have a problem with.
When I first started, my clients were parents and entrepreneurs from various industries. But they had one common problem — selling webinars and coaching packages. I focused on that one problem, and solved it.
If you don’t know what problem you want to solve, start with what you know. Look at the knowledge, expertise, and contacts you have. Then leverage those. You can speak their exact language. You can speak to their pain points. You know their inside jokes. When you’ve lived the life of your clients, they’ll pay you more to provide them with your services simply because they trust you’ll get the work done.
3. Don’t call yourself a bot builder.
For agency building, you don’t want to talk about the technical stuff that you do. It’s the transformation people are buying. You offer conversational marketing. You’re a relationship builder.
4. Try to price projects according to prospects’ revenue.
You never want to undercut your profits as an agency. However, you can adjust your pricing strategy based on a company’s revenue. Consider this: As a local business owner, are you going to spend $20,000 a month on marketing services? Probably not. But if your prospective client is pulling in hundreds of millions of dollars a year, they can afford a higher retainer.
5. Stay at a 30% profit margin or higher.
As an agency owner, you will need to hire help, whether they are contractors or employees. When you go to price for a project, make sure you walk away with at least 30% profit after tax.
For instance, say it’s going to cost you $5,000 a month to do what you need to do for a client. You want to add up all your expenses including contractors and tools. Multiply this number by your tax rate. If it’s 20%, that’s another thousand, so $6,000 in total. That’s your break-even.
Now if you want a 30% margin, that’s another $2,000 for the project total. Meaning you need to charge the client $8,000 for the project for you to meet your profit goals.
— Mary Kathryn Johnson, Founder of Messenger Funnels
Creating a sustainable Chat Marketing agency model
Whether you’re a new agency owner or been in the game for a few years, your pricing model is always growing. What works today, may not work tomorrow — but that’s okay. You can use the tried-and-true agency pricing model examples above to create a better pricing strategy and make more profit.