Not sure how to price your services? We can help you with 3 efficient techniques to charge fair prices and increase your revenue
Pricing your digital marketing services can be a real head-scratcher, right? When a new client walks through the door, do you ever second-guess yourself and wonder if your pricing strategy is right?
You’re not alone! So many agency owners and freelancers in the digital marketing business face the same challenge daily.
But don’t worry! We’re here to help! In this article, we’ll share three tried-and-true techniques for pricing your services in a way that’s fair to both you and your clients.
Here’s what you’ll find in this article:
- Why are pricing services so challenging?
- How to price digital marketing services: 3 techniques
- How to apply service pricing techniques
- Tips for pricing services strategically
Why is pricing such a challenge?
Pricing your services can be daunting (especially for digital marketing agencies or freelancers), and going about it the wrong way could end up hurting your business more than helping it.
That can make it hard to know what factors to consider when setting a price. While some might go by the hours worked, others may consider the production costs or competitors’ prices.
While these are all valid approaches, there’s more to consider (such as profit margins and your services’ value to your clients).
You also need to understand the unique needs of each business and find a pricing model that fits best.
Not considering these aspects may lead to common pitfalls, like being too afraid to charge what your services are worth or getting discouraged if you don’t see profits immediately.
Seems challenging, doesn’t it? Don’t worry! We’ve got your back! In this article, we’ll guide you through the different pricing models and share a bonus tip to increase your chances of success. Keep reading to learn how to set fair prices without hurting your business.
3 techniques for pricing your digital marketing services
Now let’s talk about some pricing techniques for services (hourly, fixed fee, and credit-based) and explore when they work best. Are you ready? Let’s go!
1. Pricing per hour
Pricing your services based on hourly rates is one of the most popular and widely used methods in today’s market. Basing your price on the hours you have available to work on a project gives you more control over the final cost.
It’s a practical choice for freelancers and smaller teams, as tracking how much time is spent delivering a service is easier.
However, as agencies grow and more team members come on board, you’ll need to consider other pricing methods, such as fixed fee pricing and calculating hourly costs.
2. Pricing by fee
The second pricing method is a fixed monthly fee. The fee is calculated based on the total hours worked by all involved in the project, tools, and equipment used to provide the services, depreciation, taxes, and other factors.
This pricing model is a bit more complex, but once the ideal structure is defined, it’s much easier to set prices and grow the agency.
Another advantage of the fee pricing model is that it allows for fixed and variable pricing. You could set a commission based on the results achieved or invest in media.
That way, agencies can scale their projects without constantly renewing the contract.
3. Pricing by Credits
This last pricing model is a contract with credits that clients can exchange for services throughout the month. Each delivery is worth a certain number of credits to be deducted from this package.
For example, let’s say the client buys 50 credits per month. They can decide whether to spend them on blog articles, which may be worth 4 or 5 credits, or social media posts, which may be between 2 and 3 credits.
Therefore, we can see that it is a mix of hourly calculation and fee and is ideal for clients who need greater flexibility in production, focusing more on delivery than necessarily on results.
How to apply service pricing techniques
Now that you know how to price services using the three most popular techniques, it’s time to roll up your sleeves and find what’s best for your agency.
Our Freelance Calculator was launched to help social media professionals price their services and set the best value for their projects. It takes into account not only the deliverables but also factors such as:
- Market rates
- Your location
- Additional services
- Experience level
- Number of clients managed or planned to be managed
- Your revenue expectations
Over 10,000 agencies and freelancers have already used the tool as a pricing resource. The best part is that their feedback has helped us improve and refine our predictions over time.
Start using our Freelancer Calculator for free and gain valuable insights for your business today!
Tips for strategic pricing
To be even more strategic when pricing your digital marketing services, we recommend paying attention to a few fundamentals:
1. Understanding the difference between price and value
Although they are often used interchangeably, price and value are different things when it comes to business. While the former refers to the amount of money charged (e.g. $500), the latter is related to the benefits delivered along with the service.
Both aspects influence the client’s final decision, so it’s important to understand the added value of the service before making a decision on the price. This can help you stand out from the competition and even allow you to charge more for your deliverables.
2. Avoiding basic pricing mistakes
As we mentioned earlier, not knowing pricing techniques and how to apply them can lead to common mistakes that should be avoided.
One of the biggest mistakes is not seeing price as a positioning strategy in the market, which can lead to prices well below the ideal and make it difficult to attract higher-paying clients.
Additionally, there are other missteps that can occur, such as being afraid to set a fair price (even if it’s high) and biting off more than you can chew, which can make it difficult to increase profit and develop your business.
3. Keep an eye on the market and competition
While they’re not the only factors to consider, the market and competition can provide valuable insights into how much customers are willing to pay in your industry and region. This information can help you determine the ideal price for your services.
However, it’s important to remember that this should be just one of the factors you consider. You’ll also need to take into account other criteria, such as the value you provide, your agency’s costs, and the expertise of your team, in order to avoid setting your prices too low and hurting your bottom line.
4. Don’t forget about agency costs
When calculating the prices of your services, do you consider all the costs involved? From salaries (if you have a team) to expenses for tools, internet, electricity, and other factors that are part of your routine, everything must be included in the calculation.
In fact, the hours worked also need to be factored into this evaluation. After all, only then will you know if the clients are really worth it.
5. Consider your business profitability
Last but not least, it’s essential to think about increasing your profitability to grow as a freelancer or agency. And it’s not just about raising prices.
You need to plan strategies that attract good clients, help increase your average ticket, and optimize your infrastructure.
With Precifiquei, for example, you can find suggestions for actions that help you put this and other pricing tips into practice much more quickly.
That way, you can apply the best digital marketing service pricing techniques to your own situation in no time! Check out the course prices and payment options now.