Optify: how to price your digital marketing services

How to Price Your Digital Marke3ng Services

Page 2 How to Price Your Digital Marke3ng Services | @op3fy

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 - @RobertEleveld

Speakers

John 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 - @jcstone3


About Op3fy Optify delivers a simple digital marketing software suite for agencies. Our complete cloud-based software eliminates the need for standalone tools and empowers agency marketers to easily create and manage demand generation programs across multiple websites, nurture prospects, prioritize the best performing programs and streamline reporting of client results - all from 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: [email protected] Help: [email protected] Other Inquiries: [email protected]


Agenda •  Pricing prerequisites •  Four pricing methods •  The service model •  Final 3ps • Q&A


Poll Ques3on #1 •  How do you feel about your current pricing ? Score your pricing maturity level:

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

0% 10% 20% 30% 40%


Pricing Prerequisites – Cost Structure

•  Fixed & Variable •  Margins •  Create a baseline blended rate


Pricing Prerequisites – Market Condi3ons •  Market prices •  Price elas3city •  Differen3a3on

Source: h_p://www.seomoz.org/blog/seo-‐pricing-‐costs-‐of-‐services

US UK


The Four Pricing Methods for Your Services Descrip0on Pros Cons Opportunity Type

Time & Material

Fixed Bid Project

Retainer

Value-‐Based


Time & Material

Pros Cons Opportunity Type

Your firm maintains profitably if scope increases, or the scope isn’t well understood.

Client may begin to not include you in key conversa3ons. Percep3on you are always “on the clock”.

Any project lacking 3ght defini3on or deliverables. Olen clients will s3ll want at least an es3mate.

Google server farm (source: VentureBeat)


Fixed-‐Bid Project


Client feels they can budget a project, so they olen prefer this method.

If you don’t ac3vely manage expecta3ons and scope creep, a project can quickly become unprofitable.

Good way to earn trust with a new client on a small project, or a type of project you do olen. General rule: 20-‐30% premium for fixed bid


Retainer


Improved cash-‐flow visibility and resource planning. Clients can budget a consistent number.

Very few, except that you may need to manage client expecta3ons so as to not let scope of services grow.

Olen proposed aler trust established with ini3al project, or if you have well-‐defined services and client references (professional website, case studies, published pricing, etc.).


Value-‐Based


Usually much higher gross margins. Tougher to do repeatedly without significant, tangible differen3a3on from compe3tors (defined deliverables, specific reports and/or insights).

Ongoing service or campaign where replacement cost would be a headcount or more. (Note: a blended team could do that too)


The Four Pricing Methods for Your Services Descrip0on Pros Cons Opportunity Type

Time & Material Most common services billing method for any type of engagement.

Your firm maintains profitably if scope increases, or the scope isn’t well understood.

Client may begin to not include you in key conversa3ons. Percep3on you are always “on the clock”.

Any project lacking 3ght defini3on or deliverables. Olen clients will s3ll want at least an es3mate.

Fixed Bid Project Your firm commits to a fixed price. Services firms olen build a 20-‐30% premium in bid to cover risk.

Client feels they can budget a project, so they olen prefer this method.

If you don’t ac3vely manage expecta3ons and scope creep, a project can quickly become unprofitable.

Good way to earn trust with a new client on a small project, or a type of project you do olen.

Retainer A fixed monthly or quarterly fee for an ongoing service or campaign.

Improved cash-‐flow visibility and resource planning. Clients can budget a consistent number.

Very few, except that you may need to manage client expecta3ons so as to not let scope of services grow.

Olen proposed aler trust established with ini3al project, or if you have well-‐defined services and client references.

Value-‐Based Pricing a service based on replacement cost or percep3on of value.

Usually much higher gross margins.

Tougher to do repeatedly without significant, tangible differen3a3on from compe3tors.

Ongoing service or campaign where replacement cost would be a headcount or more.


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

16%

34% 20%

15% 15%

1 2 3 4 5


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!


So, what’s the answer?

Service Model

Solu0on Services SoluDon offerings that have a defined

scope and standardized pricing.

Project Services Custom project services that use standard phasing and methods.

A service model helps you capture client value and adapt to a rapidly changing marketplace.


Service Model Benefits

Sell Be;er Sa0sfy Clients Drive Profitability

ü  Clients gain confidence in our ability to deliver

ü  Demonstrate services and approach

ü  Can show sample deliverables

ü  Be_er align expecta3ons

ü  Higher quality deliverables from consistent process

ü  Joint teams are clear on how to work together

ü  Teams work more efficiently

ü  No “reinven3ng the wheel”

ü  Greater reuse ü  Lower project

risk ü  Feedback loops

for constant evolu3on


Building an effec3ve Service Model

•  Solu3on Services § Develop a services hierarchy aligned with agency strategy

§ Define specific service components, scope and value parameters

§ Align skill disciplines to service architecture.

•  Project Services § Develop standard “Work Architectures” § Define phase entrance / exit criteria § Develop standard ar3facts, templates, tools and deliverables.

Engagement level pricing model

Solu3on level pricing model


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 White Paper/ Premium Content

ü  Number of words ü  Technical depth 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  …


1 2 3 4

Example Project Service Model

PHASE ENVISION Develop high-level roadmap, prioritize initiatives, & build business case

BLUEPRINT Conduct analysis & requirements gathering necessary for detailed design

EXPERIENCE Conduct detailed visual, functional and technical design

LAUNCH Build, test, and roll out the system

BENEFITS Clearly defined—and prioritized—initiative(s)

Multi-phase roadmap

Well-defined scope of functionality to design

Understanding of the problem domain

Design foundation

Well-defined scope of functionality to build

Well understood—and validated—design

Well-tested, production-ready, documented system

Trained users

KEY ACTIVITIES

Conduct brainstorming workshop

Conduct market assessment

Conduct prioritization workshops (prioritize by strategic objectives and technical and operational feasibilities)

Develop economic model

Assess current situation/capabilities

Understand audiences

Determine creative strategy

Define requirements

Create experience plan

Refine requirements

Design and usability test features

Design technical architecture

Create prototypes and design explorations

Create style guide

Create launch plan

Construct the system

Conduct unit, integration, and user-acceptance testing

Write documentation

Plan rollout and transition

Rollout system and train users


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.


Addi3onal Resources •  Op3fy Pricing Blog Series:

§  h_p://www.op3fy.net/digital-‐marke3ng-‐agency/new-‐blog-‐series-‐how-‐to-‐price-‐your-‐digital-‐marke3ng-‐agency-‐services

§  h_p://www.op3fy.net/digital-‐marke3ng-‐agency/goldilocks-‐and-‐the-‐agency-‐that-‐posted-‐its-‐pricing

§  h_p://www.op3fy.net/digital-‐marke3ng-‐agency/3-‐ways-‐digital-‐marke3ng-‐agencies-‐can-‐use-‐pricing-‐as-‐a-‐compe33ve-‐advantage

•  SEOmoz SEO agencies pricing study – 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

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: [email protected] Help: [email protected] Other Inquiries: [email protected]

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Optify: how to price your digital marketing services