Optify: how to price your digital marketing services


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We brought together a combined experience of more than 50 years in business, marketing and pricing to address some of the main questions and challenges of pricing your digital marketing services. Since pricing is a topic that is always top-of-mind for all business owners, especially agencies and services firms, in this webinar we tried to address some of the more pressing questions. Read this presentation to learn:
- Pricing prerequisites
- Four (4) methods of pricing
- The service model and how to use it for pricing
- Tips for pricing

Read more and watch the recorded webinar here http://www.optify.net/webinars/how-to-price-your-digital-marketing-services

Published in: Business, Career

Optify: how to price your digital marketing services

  1. 1. How  to  Price  Your    Digital  Marke3ng    Services  
  2. 2. Speakers  Rob Eleveld, CEO, Optify Rob Eleveld, CEO of Optify is a 20-year tech veteran with deep experience in B2B sales and marketing. Rob is passionate about growing business through partner channels at Optify and excited about the opportunity that inbound marketing affords to forward-thinking digital marketing agencies. Follow Rob on Twitter - @RobertEleveldJohn C Stone III, Founder and CEO, Revenue Architects John Stone is the founder and CEO of Revenue Architects – a services firm that helps clients build innovation and new architectures for revenue growth. Prior to starting Revenue Architects, John was President of CrossTech Partners, a digital marketing agency, and held leadership posts at PA Consulting, Viant (digital business), AT&T and IBM. Follow John on Twitter - @jcstone3Page  2   How  to  Price  Your  Digital  Marke3ng  Services  |  @op3fy  
  3. 3. About  Op3fy  Optify delivers a simple digital marketing software suite for agencies. Ourcomplete cloud-based software eliminates the need for standalone tools andempowers agency marketers to easily create and manage demandgeneration programs across multiple websites, nurture prospects, prioritizethe best performing programs and streamline reporting of client results - allfrom one login. Optify, Inc 710 2nd Ave, Suite 840 Seattle, WA 98104 1 (206) 388-4234 (phone) 1 (877) 2-OPTIFY (toll-free) 1 (206) 787-1410 (fax) Sales: sales@optify.net Help: support@optify.net Other Inquiries: info@optify.netPage  3   How  to  Price  Your  Digital  Marke3ng  Services  |  @op3fy  
  4. 4. Agenda   •  Pricing  prerequisites     •  Four  pricing  methods   •  The  service  model   •  Final  3ps   •  Q&A  Page  4   How  to  Price  Your  Digital  Marke3ng  Services  |  @op3fy  
  5. 5. Poll  Ques3on  #1   •  How  do  you  feel  about  your  current   pricing  ?  Score  your  pricing  maturity  level:   0%   10%   20%   30%   40%   1.  I’m  just  star3ng  and  not  sure  what   the  right  pricing  model  for  me   2.  I’m  really  struggling  with  seTng  it   3.  I’m  not  sure  if  I  have  it  nailed   4.  I  think  it’s  okay,  could  use  some   adjustments   5.  I  have  it  nailed  down  Page  5   How  to  Price  Your  Digital  Marke3ng  Services  |  @op3fy  
  6. 6. Pricing  Prerequisites  –  Cost  Structure   •  Fixed  &  Variable   •  Margins     •  Create  a  baseline   blended  rate  Page  6   How  to  Price  Your  Digital  Marke3ng  Services  |  @op3fy  
  7. 7. Pricing  Prerequisites  –  Market  Condi3ons   •  Market  prices   •  Price  elas3city     •  Differen3a3on     US   UK   Source:  h_p://www.seomoz.org/blog/seo-­‐pricing-­‐costs-­‐of-­‐services      Page  7   How  to  Price  Your  Digital  Marke3ng  Services  |  @op3fy  
  8. 8. The  Four  Pricing  Methods  for  Your  Services       Descrip0on   Pros   Cons   Opportunity  Type  Time  &  Material  Fixed  Bid  Project  Retainer  Value-­‐Based  Page  8   How  to  Price  Your  Digital  Marke3ng  Services  |  @op3fy  
  9. 9. Time  &  Material   Google  server  farm  (source:  VentureBeat)   Pros   Cons   Opportunity  Type   Your  firm  maintains  profitably  if   Client  may  begin  to  not  include  you   Any  project  lacking  3ght  defini3on   scope  increases,  or  the  scope  isn’t   in  key  conversa3ons.  Percep3on   or  deliverables.  Olen  clients  will   well  understood.       you  are  always  “on  the  clock”.   s3ll  want  at  least  an  es3mate.    Page  9   How  to  Price  Your  Digital  Marke3ng  Services  |  @op3fy  
  10. 10. Fixed-­‐Bid  Project   Pros   Cons   Opportunity  Type   Client  feels  they  can  budget  a   If  you  don’t  ac3vely  manage   Good  way  to  earn  trust  with  a  new   project,  so  they  olen  prefer  this   expecta3ons  and  scope  creep,  a   client  on  a  small  project,  or  a  type  of   method.   project  can  quickly  become   project  you  do  olen.   unprofitable.   General  rule:     20-­‐30%  premium  for  fixed  bid  Page  10   How  to  Price  Your  Digital  Marke3ng  Services  |  @op3fy  
  11. 11. Retainer     Pros   Cons   Opportunity  Type   Improved  cash-­‐flow  visibility  and   Very  few,  except  that  you  may   Olen  proposed  aler  trust   resource  planning.  Clients  can   need  to  manage  client  expecta3ons   established  with  ini3al  project,  or  if   budget  a  consistent  number.     so  as  to  not  let  scope  of  services   you  have  well-­‐defined  services  and   grow.   client  references  (professional   website,  case  studies,  published   pricing,  etc.).    Page  11   How  to  Price  Your  Digital  Marke3ng  Services  |  @op3fy  
  12. 12. Value-­‐Based   Pros   Cons   Opportunity  Type   Usually  much  higher  gross  margins.   Tougher  to  do  repeatedly  without   Ongoing  service  or  campaign  where   significant,  tangible  differen3a3on   replacement  cost  would  be  a   from  compe3tors  (defined   headcount  or  more.   deliverables,  specific  reports  and/or   (Note:  a  blended  team  could  do  that   insights).   too)  Page  12   How  to  Price  Your  Digital  Marke3ng  Services  |  @op3fy  
  13. 13. The  Four  Pricing  Methods  for  Your  Services         Descrip0on   Pros   Cons   Opportunity  Type  Time  &  Material   Most  common   Your  firm  maintains   Client  may  begin  to   Any  project  lacking   services  billing   profitably  if  scope   not  include  you  in  key   3ght  defini3on  or   method  for  any  type   increases,  or  the   conversa3ons.   deliverables.  Olen   of  engagement.   scope  isn’t  well   Percep3on  you  are   clients  will  s3ll  want   understood.       always  “on  the   at  least  an  es3mate.     clock”.  Fixed  Bid  Project   Your  firm  commits  to   Client  feels  they  can   If  you  don’t  ac3vely   Good  way  to  earn   a  fixed  price.  Services   budget  a  project,  so   manage  expecta3ons   trust  with  a  new   firms  olen  build  a   they  olen  prefer  this   and  scope  creep,  a   client  on  a  small   20-­‐30%  premium  in   method.   project  can  quickly   project,  or  a  type  of   bid  to  cover  risk.   become  unprofitable.   project  you  do  olen.  Retainer   A  fixed  monthly  or   Improved  cash-­‐flow   Very  few,  except  that   Olen  proposed  aler   quarterly  fee  for  an   visibility  and  resource   you  may  need  to   trust  established  with   ongoing  service  or   planning.  Clients  can   manage  client   ini3al  project,  or  if   campaign.   budget  a  consistent   expecta3ons  so  as  to   you  have  well-­‐ number.     not  let  scope  of   defined  services  and   services  grow.   client  references.  Value-­‐Based   Pricing  a  service   Usually  much  higher   Tougher  to  do   Ongoing  service  or   based  on   gross  margins.   repeatedly  without   campaign  where   replacement  cost  or   significant,  tangible   replacement  cost   percep3on  of  value.   differen3a3on  from   would  be  a   compe3tors.   headcount  or  more.  Page  13   How  to  Price  Your  Digital  Marke3ng  Services  |  @op3fy  
  14. 14. Poll  Ques3on  #2   •  How  do  you  rate  your  service  delivery  process?   1.  We’re  just  star3ng  and  don’t  have  a  process  in  place   2.  We  have  some  internal  processes,  but  nothing  standardized     3.  We  have  clear  internal  processes  for  delivering  our  service,  but  we  don’t  use   them  to  price  or  communicate  our  service   4.  We  have  clear  and  communicated  process  that  our  customers  know  and   appreciate,  but  we  don’t  use  it  for  pricing   5.  Our  delivery  process  and  method  is  used  both  internally  and  externally  and  is   the  core  of  our  service     1   2   3   4   5   15%   16%   15%   34%   20%  Page  14   How  to  Price  Your  Digital  Marke3ng  Services  |  @op3fy  
  15. 15. A  Vision  for  Service  Pricing     1.  Our  services  are  standardized   and  we  deliver  them   effec3vely  and  efficiently.   2.  Our  services  are  perceived  as   high  value  by  our  clients  and   experiencing  strong  demand   in  the  marketplace.   3.  We  easily  scope  and  price  our   services  profitability  while   delivering  high  levels  of  client   sa3sfac3on.       The problem is that clients want the latest advantage and skills, resources and methods constantly evolve!Page  15   How  to  Price  Your  Digital  Marke3ng  Services  |  @op3fy  
  16. 16. So,  what’s  the  answer?   Service  Model   Solu0on  Services       Project  Services     SoluDon  offerings  that  have  a  defined    Custom  project  services  that  use   scope  and  standardized  pricing.   standard  phasing  and  methods.   A  service  model  helps  you  capture  client  value  and   adapt  to  a  rapidly  changing  marketplace.  Page  16   How  to  Price  Your  Digital  Marke3ng  Services  |  @op3fy  
  17. 17. Service  Model  Benefits   Sell  Be;er   Sa0sfy  Clients   Drive  Profitability   ü  Clients  gain   ü  Be_er  align   ü  Teams  work   confidence  in   expecta3ons     more  efficiently   our  ability  to   ü  Higher  quality   ü  No   reinven3ng   deliver   deliverables  from   the  wheel   ü  Demonstrate   consistent  process   ü  Greater  reuse   services  and   ü  Joint  teams  are     ü  Lower  project   approach   clear  on  how  to   risk   ü  Can  show   work  together   ü  Feedback  loops   sample   for  constant   deliverables   evolu3on  Page  17   How  to  Price  Your  Digital  Marke3ng  Services  |  @op3fy  
  18. 18. Building  an  effec3ve  Service  Model   •  Solu3on  Services   §  Develop  a  services  hierarchy  aligned  with   agency  strategy   Solu3on  level   §  Define  specific  service  components,  scope   pricing  model   and  value  parameters     §  Align  skill  disciplines  to  service  architecture.   •  Project  Services   §  Develop  standard  “Work  Architectures”   Engagement  level   §  Define  phase  entrance  /  exit  criteria   pricing  model   §  Develop  standard  ar3facts,    templates,  tools   and  deliverables.  Page  18   How  to  Price  Your  Digital  Marke3ng  Services  |  @op3fy  
  19. 19. Example  Solu0on  Services    Solu0on  Service   Example  Scope  Parameters  eMail  Marke3ng  Program   ü  Number  of  emails  per  month     ü  Level  of  crea3ve   ü  Number  of  words   ü  A-­‐B  tes3ng   ü  …  Lead  scoring  model   ü  Number  of  lead  types   ü  Tool  set  for  lead  scoring   ü  Sales-­‐marke3ng  alignment  process   ü  MQL  vs  SQL   ü  …  Blog     ü  Number  of  words  White  Paper/  Premium   ü  Technical  depth  Content   ü  Graphics  and  visual  design   ü  …  Social  Media     ü  Number  of  channels   ü  Follower  and  engagement  goals   ü  Source  of  content   ü  Approval  process  and  compliance   ü  …  Page  19   How  to  Price  Your  Digital  Marke3ng  Services  |  @op3fy  
  20. 20. Example  Project  Service  Model   1   2   3   4  PHASE ENVISION BLUEPRINT EXPERIENCE LAUNCH Develop high-level Conduct analysis Conduct detailed Build, test, and roadmap, prioritize & requirements visual, functional roll out the system initiatives, & build gathering and technical business case necessary for design detailed designBENEFITS Clearly defined—and Well-defined scope of Well-defined scope of Well-tested, production- prioritized—initiative(s) functionality to design functionality to build ready, documented system Multi-phase roadmap Understanding of the Well understood—and problem domain validated—design Trained users Design foundationKEY Conduct brainstorming Assess current Refine requirements Construct the systemACTIVITIES workshop situation/capabilities Design and usability Conduct unit, Conduct market Understand audiences test features integration, and user- assessment acceptance testing Design technical Conduct prioritization Determine creative architecture Write documentation workshops (prioritize by strategy Create prototypes and Plan rollout and strategic objectives and Define requirements design explorations transition technical and operational feasibilities) Create experience plan Create style guide Rollout system and train users Develop economic model Create launch plan Page  20   How  to  Price  Your  Digital  Marke3ng  Services  |  @op3fy  
  21. 21. Summary   •  Services  change  con3nuously,  but  a  service  model  helps  inform  pricing  and   drive  efficiency  in  the  organiza3on   •  Incorpora3ng  the  service  model  discussion  during  the  sales  process    improves   client  confidence  and  sets  expecta3ons   •  Sa3sfied  clients  with  higher  quality  delivery  drives  client  reten3on  and  share  of   wallet   •  Evolve  toward  the  vision  state  with  repeatable  service  delivery  and  facilitate   more  accurate  pricing.  Page  21   How  to  Price  Your  Digital  Marke3ng  Services  |  @op3fy  
  22. 22. Addi3onal  Resources   •  Op3fy  Pricing  Blog  Series:   Optify, Inc §  h_p://www.op3fy.net/digital-­‐marke3ng-­‐agency/new-­‐blog-­‐ 710 2nd Ave, Suite 840 Seattle, WA 98104 series-­‐how-­‐to-­‐price-­‐your-­‐digital-­‐marke3ng-­‐agency-­‐services     1 (206) 388-4234 (phone) §  h_p://www.op3fy.net/digital-­‐marke3ng-­‐agency/goldilocks-­‐and-­‐ 1 (877) 2-OPTIFY (toll-free) the-­‐agency-­‐that-­‐posted-­‐its-­‐pricing   1 (206) 787-1410 (fax) §  h_p://www.op3fy.net/digital-­‐marke3ng-­‐agency/3-­‐ways-­‐digital-­‐ marke3ng-­‐agencies-­‐can-­‐use-­‐pricing-­‐as-­‐a-­‐compe33ve-­‐advantage   Sales: sales@optify.net Help: support@optify.net •  SEOmoz  SEO  agencies  pricing  study  –     Other Inquiries: info@optify.net h_p://www.seomoz.org/blog/seo-­‐pricing-­‐costs-­‐of-­‐services     •  Op3fy  Demo  –  h_p://www.op3fy.net/demo   •  Free  trial  –  h_p://www.op3fy.net/sign-­‐up      Page  22   How  to  Price  Your  Digital  Marke3ng  Services  |  @op3fy