The Pros & cons of PublisheD AGencY PricinGHow to Determine If Publishing Pricing for Marketing Services Is Right for Your Agency

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The Pros & cons of PublisheD AGencY PricinG.

WRItten BY SHAnnon JoHnSon

Shannon is an Inbound Marketing Manager

at HubSpot. She works closely with the

agency sales team to ensure the educational

resources HubSpot publishes meet the

needs of agency marketers. She’s an

Arizonan-turned-Bostonian, a dog lover, and

an ASU alum who likes to dabble in digital

photography.

follow me on TwiTTer.@shAnnoPoP

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conTenTs.

truSt: tHe AlMigHty cAtAlyStfor trAnSpArent pricing.

05

The cons of PublisheD PricinG.

The Pros of PublisheD PricinG.

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The TAkeAwAY.17

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There’s a certain mystery to what ingredients truly comprise a

Taco Bell Gordita Supreme. Likewise, “There’s a certain mystery to

billable hours and agency services,” says Paul Roetzer in his book,

The Marketing Agency Blueprint. “Clients are not always sure exactly

what they are getting or what it costs. This works for agencies because

billable hours are an imperfect mix of art and science, and as long as

the agency produces results, clients are happy,” he says.

Bad things happen when clients start to feel like they’re not getting the

results they were promised, though. According to Paul:

All of a sudden, invoices are being scrutinized a little more

closely. The client’s CFO takes a keen interest in the growing

monthly expense, and now the CMO has to explain the value

of the agency to his executive team. The problem is that he

has no idea. After four months of $10,000 per month, he has

invoices full of activities, but nothing tangible to share with his

bosses to justify the relationship.

Over time, the lack of transparency in pricing per deliverable becomes

detrimental to the client-agency relationship because the client

inevitably starts to question what they’re getting for what they’re paying.

truSt: tHe AlMigHty cAtAlySt for trAnSpArent pricing.

“”

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Soon after, trust in the agency begins to evaporate, and the client

becomes more skeptical of the advice they’ve been paying gobs of

money to take into account.

As an agency, how do you engender enough client trust to prevent a

perception of dwindling value? The answer for some agencies has been

to develop transparent, line-itemed pricing models that are published

right on their websites for any prospective client to see.

But is publishing pricing right for you? There are costs and benefits

associated with both options. Let’s discuss them and get some

perspective from agency marketers on both sides of the coin so you

can make an educated pricing decision for your own agency.

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tHe proS of publiSHeD pricing.

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“

John McTigue, EVP and Co-Owner at an enterprise inbound marketing

agency called Kuno Creative, is one agency executive who is gung

ho about transparent pricing. Even after much “back and forth on

the visibility of [Kuno Creative’s] pricing over the years,” the ultimate

decision to publish some of their pricing has done wonders for their

business. In a 2011 blog post, John wrote:

We have decided to publish pricing for our two main services,

inbound marketing services and HubSpot [CMS] design.

Our view is that transparency will help us win in competitive

situations and help to pre-qualify our customers before

we commit time and resources to sales consultations. We

feel that the ability to improve customer conversion rates

outweighs the sheer number of opportunities. We recognize

that open pricing may help the competition to some degree,

but we’re not obsessing about that. Our focus is on problem

solving, delivering and customer success. Those factors will

drive both revenue generation and profitability.

Nowadays Kuno Creative has starting prices listed on their site for

ongoing inbound marketing services including paid search, social

media, blogging, content creation, website design, as well as their one-

time offering -- an assessment and strategic marketing plan.

So, why might you want to take after Kuno Creative?

”

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pro #1: Differentiate from countless other Marketing Agencies.

If you were to go read a random assortment of “About” pages from

marketing agency websites, you would likely find a lot of descriptors like

these: “innovative,” “unconventional,” “results-oriented,” “integrated,”

and “full-service.” With so many agencies swimming in a sea of

sameness, differentiation must manifest itself in every crevice of the

business -- pricing included. When the vast majority of marketing

agencies position themselves as pie-in-the-sky, we-do-everything firms

that base pricing on the legacy billable hour, why wouldn’t you want to

become, say, the pufferfish among a homogeneous school of salmon?

Inbound marketing agencies like Kuno Creative, PR 20/20, and

Impact Branding & Design are the pufferfish. They stand out by not

only providing ongoing, measurable inbound marketing services in

the first place, but packaging and pricing them in a way that makes it

refreshingly easy for prospective clients to understand what they’ll get

for their money. From the beginning.

Clients who are accustomed to paying for hours spent on nubilous and

sometimes ineffective marketing tasks often find the accountability and

transparency associated with published pricing quite alluring.

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pro #2: Shorten the Sales cycle by Avoiding prospects who can’t Afford you.

According to Patrick Campbell, the Co-Founder & CEO at Price

Intelligently, a software company that helps organizations master their

pricing strategies, “Publishing pricing allows you to instill confidence in

your prospects, as well as streamline the whole process for your sales

team because you’re essentially rooting out those clients who can’t

afford you anyway.”

John Bonini, Director of Marketing at Impact Branding & Design, agreed

when he explained why his agency has their pricing out in the open:

The main function for including pricing on our website

was to help assist in the shortening of our sales process.

Prospects now have a general idea of what to expect, as well

as what goes into the pricing strategy for developing and

executing their inbound marketing campaign. This allows our

sales team to spend less time on a connect call discussing

price, and more time discussing challenges, goals, as well

as the background information essential for furthering the

relationship.

What could your business development and strategy teams do with

hours of recovered time?”

“

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pro #3: improve client-Agency chemistry by Allowing prospects to Self-Select your firm.

Transparency in pricing is about turning away the wrong clients, not

just turning away prospects who can’t afford your marketing services.

While published pricing may repel some prospects you coulda-shoulda-

woulda taken aboard, it may attract others who better jibe with your

agency anyway. Why? Because by the time they contact your team,

they’ve already done enough homework to determine that your agency

offers the services they need at a feasible price.

They’ll appreciate the time you saved them trying to get a pricing

answer out of your biz dev representative, just as your team will

appreciate not having to despairingly schmooze them into the next

stage in the sales process. Another big plus: your agency gains the

power to decide if you’d actually like to work with the client. Better

client-agency chemistry makes for better, longer-lasting, and more

profitable relationships.

Now that we’ve covered the major benefits of having pricing exposed

on your agency’s website, let’s change gears and see what the

opposition has to say.

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tHe conS of publiSHeD pricing.

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On the other side of the fence from John McTigue over at Kuno Creative

is Tiffany Sauder, President of Indianapolis-based Element Three, who

says the agency doesn’t -- and probably never will -- publish their

pricing:

We don’t want people to buy the things we do; we want

them to buy the impact we have. Published pricing makes

the conversation with the prospect too focused on tactics

from the onset, and we all become tactically obsessed and

strategically blind.

The team at Element Three prefers to have a conversation with a

prospect before arriving at the pricing discussion. That way, when the

work begins, they can focus on achieving results instead of checking

off a list of tasks. Furthermore, they avoid leaving money on the table

from potential clients who might be willing to pay more. If a client has a

budget for an ongoing retainer that happens to be twice as large as your

agency’s biggest offering, would you want them to turn away before

talking to you? Probably not.

“”

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x

con #1: published pricing Sets a cap on profit Margin.

Some dissidents argue that when you set even a base price for a

particular service, you immediately place a cap on potential profit.

Blair Enns, agency consultant and author of The Win Without Pitching

Manifesto, puts it this way:

Would you charge the Chevrolet division of General Motors

the same for a logo redesign as you would charge Bob’s

Chevrolet Dealership in Des Moines, Iowa? The answer is

no. Or it should be no. The reason the answer should be no

is because the impact of your work would have more value,

and there needs to be a certain amount of sting with your

pricing. Just the right amount. One of the challenges with

charging too little is that it becomes easy for your clients to

lose respect for you, and afford to pay for your advice and not

take it.”

“

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con #2: published pricing exposes your Agency to price Shoppers and competitors.

If you put your pricing out in the open, you do run the risk of

competitors copying your approach. Additionally, prospects can shop

around and compare; giving them ammo for strongarming you into

decreasing your price. Transparent prices may also invite the wrong

conversation with the wrong people, wasting your sales team’s time

on qualifying people who care less about outcomes and more about

getting a good deal.

One reason Todd Hockenberry, founder of marketing firm Top

Line Results, doesn’t publish his pricing is to avoid these types of

conversations:

If somebody leads a conversation with me about pricing and

says, ‘This agency was going to charge this much for this

service; will you change your price?’ I’m not really interested

in that conversation because that person is obviously just

price shopping. I’m looking for people to come to me and say,

‘I’m not growing my business fast enough; my sales team is

not being effective enough; our marketing dollars aren’t giving

us a good return; how can you help us grow our business in

an expanding global market?’ Those are the problems we

solve.

“

”

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con #3: published pricing commoditizes the Marketing Services business.

Dissenters of published pricing also insist that revealed pricing sets the

stage for the agency to play the role of a vendor instead of a trusted

partner. The health of the client-agency relationship becomes too

heavily dependent on the completion of a defined volume of tasks (a

certain number of blog posts, ebooks, or hours managing social media

channels, for example) instead of doing whatever necessary to create

value and drive results.

Here’s what Todd had to say about it:

[My job is] all about business results first. My job as a

consultant is to figure out what tasks we need to do. If I can

do two blog posts for a clients a month to get them the leads

and results they’re looking for, why would I sell them seven

or eight blog posts? I wouldn’t. But if I decided to, I would

base my fee increase on the results, not on the work I was

doing. As soon as you base your fees on the work you do, it’s

a task checklist, which lets your client focus on whether you

did everything you said you were going to do instead of the

results and value and benefit to the client.

So, if you want the flexibility to only do what’s required to meet a goal,

itemized published pricing might not be ideal.

“

”

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After exploring the most common pros and cons of publishing agency

pricing, hopefully it has become much more clear whether your firm should

or shouldn’t reveal what you charge. If not, here’s a simple way to think

about it.

You May Want to Publish If...

• You think transparency and openness outweighs your

competition’s ability to price competitively.

• You make a large enough margin on your established prices.

• You mostly offer repeatable inbound marketing services, and

find that you’re offering a similar service package to more than

3-5 clients.

You May Not Want to Publish If...

• You don’t yet know what to charge.

• You aren’t currently offering easily bundled, ongoing inbound

marketing services.

• You play more of a consultative role and offer higher-level

strategic work rather than execution.

No matter what you decide, just remember that placing price tags on

your website does not replace the need for an upfront inbound marketing

assessment or an effective sales methodology. Selling is essential, even if

published pricing minimizes the length of the sales cycle.

tHe tAkeAwAy.

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Being an inbound marketing agency is easier when you’re a HubSpot

Partner. Find out more about improving your own agency’s marketing

and becoming a partner, and get access to a wealth of training classes,

resources and account support to help you streamline inbound

marketing service delivery for your clients.

trAnSforM your firM into An inbounD Agency witH HubSpot.

tAlk to uS toDAy.

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