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Digital Marketing Agency Pricing Guide: How Much Should You Charge?

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For any business owner, the primary concern is to make sure that their business makes money. Just like every other industry, competition is fierce in the world of digital marketing.


That only means you’ll need to have competitive prices so that customers are attracted to your agency. But you still need to make a profit in order to keep your digital marketing agency up and running.


Moreover, a profit is a healthy incentive that every business requires to thrive and grow.


Which criteria should you use to decide the digital agency fee structure?


This can be one of the most challenging questions faced by those starting a digital agency. As a general business rule, the product’s price must be such that it covers the cost of the service rendered and the overhead expense. In digital marketing, you can base your pricing model on the cost of the specific services you provide.


But remember, your digital marketing agency pricing model can either make or break you. It can influence various aspects of your agency, from who you hire to how you pitch. So it’s imperative that you choose a pricing model that aligns with your long-term goals.


Selecting a reasonable price


Digital agency rates can vary, especially those that outsource their work. They can afford to cut prices without dipping significantly into their profit margins. But how do you quote a price that is in line with customer expectations and covers the cost of running your agency?


Here are a few factors that will help you determine how much to charge.


1. How much does it cost to run the agency?


Several expenses influence this figure, such as:


Office expenses- Whether you work from home or have a dedicated office, operational costs include rent, utilities, equipment, maintenance, supplies, etc.



Production expenses- To run efficient campaigns, digital agencies have to invest in multiple tools and software. The list is endless, but common ones include office productivity software, task management software, CRM, SEO tools, email marketing, social media automation software, etc.



Employment costs- Besides salaries, digital agencies need to take into account things such as benefits, insurance, and bonuses.



Professional fees- Running a business comes with its own bucket load of expenses, from government licensing fees to corporate taxes to attorney fees. These should never be overlooked.



Additional expenses- Every business needs extra capital to help it grow. Digital marketers need to allocate an amount that allows them to cover variable costs of marketing such as advertising, conference fees, directory listing fees, etc. This may also include travel and accommodation expenses. For others, it could also involve loan repayments.


2. The digital marketing agency pricing model you wish to implement


As a digital marketer, there are various pricing structures that you can use to charge your clients. Whether you decide to charge your clients upfront, 50 before 50 afterward, or on completion is up to you and the services you are offering.


Here are some of your options:


1. Hourly-based


This is the ideal approach for agencies that are just starting out and are unsure of how long a project can take. Moreover, it’s the simplest way to bill your clients, especially those who ask for lots of edits or revisions.


The important thing here is to remember that your hourly rate needs to be such that it maintains the agency’s upkeep. However, make sure to inform your clients on how long the project could take, keeping a few extra hours leeway for yourself. More importantly, if you want to scale, you may end up raising digital agency pricing or move to a different pricing model.


- Simple and straightforward

- Easy for clients to understand how to stay within the budget

- Lengthy projects are a great way to earn cash


Cons:


- You need to track and document the hours you work in order to get your worth

- No incentive to work faster


2. Project-based


Charging a flat fee for any project is a simple way to run a digital marketing agency, especially if you have the skills and resources for a particular service.


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