Agency pricing: the models and how to pick one

How should an agency price its work?

Price from the inside out: know what the work costs you to deliver, then set a price the result is worth to the client. Work through these steps:

1. Add up your costs. Count the time of everyone who touches the work, the tools it needs and your share of rent and other overhead.
2. Check your own hours. Look back at similar past jobs and note how long each kind took, from start to sign-off.
3. Ask what the result is worth. Find out what a win would mean for the client, in their terms.
4. Pick a model. Match it to how the work is scoped and how often it repeats.
5. Write the price down. Put it in writing with what it covers and what it leaves out.

Then test the number before you send it:

• Does it cover your costs with room to spare?
• Would the client still say yes if they saw the result first?
• Could you deliver the same work next month at the same price?

What agency pricing models are there?

Each model shifts a different risk between you and the client. Here's how they compare:

Hourly and project pricing suit one-off work, and value-based pricing suits work tied to a number the client already tracks.

A retainer suits work that comes back every month, such as content or website care, because both sides know the fee in advance. For what a retainer covers, see how an agency retainer works.

Productized pricing turns a service into a package with one price and one set of steps, which makes it easier to sell and to hand off. For running a productized service, see software for a productized service.

Which pricing model suits a marketing agency?

The model that suits a marketing agency is the one that matches the shape of its work, and an agency can use more than one. These questions point you to a model:

• Is the work ongoing, or a one-off? Ongoing work leans toward a retainer, and a one-off build toward a project price.
• Can you define the scope before you start? If you can't, hourly pricing protects you while the scope gets clearer.
• Have you kept records of how long jobs take? Without them, a fixed price is a guess.
• Can the work be tied to a number the client tracks? If it can, value-based pricing is worth a look.
• Does the same package fit many clients? If it does, a productized offer may be a fit.

In our view, it also helps to add services that bring in money without using up your own hours. A model that lets the work run without you in every task leaves room for that.

Once you've settled on a retainer, the next job is the number itself. For working out the monthly fee, see how to set a retainer fee.