Value Based Pricing for Marketing Agencies


Ted Levitt from Harvard said it best:

"...nobody ever buys a three-quarter-inch drill; they buy the expectation of a three-quarter-inch hole"
Traditionally marketing services and consulting contracts were priced in hours; each hour represented a single unit of billable time.
Makes sense, right?

Not according to Tim Williams!

Tim runs Ignition Group, a consulting firm that consults with (ironically) ad and marketing agencies. And Tim says that selling outcomes is far more accurate than selling services.

Outcomes take the form of …

  1. Business outcomes
  2. Marketing specific
  3. Customer related
  4. Channel specific
  5. Internal victories or political moves

The MKG Team Tends to Agree With Tim

Regardless of the specific type of services we contract with our clients, no 2 projects ever begin and end exactly the same.

In other words, no two contracts are ever alike

So how do we price our contracts?

The variables we consider from a value and outcomes standpoint include:

 

  • Unique-ness of the Scope of Work: Is this pretty straightforward or will it be highly custom based on what this client needs?
  • Outcome Desired: What are we asking to do here - grow traffic/rankings nominally or affect bigger impact?
  • Total resources required: This includes human resources (hours invested), internal stakeholder resources (client marketing + engineering teams), tools and other financial resources we're likely to expend on the project

How does your company purchase consulting services?

Share how you purchase consulting services in the comments section below.

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