Rate cards, price bands and benchmarking. How do you find the right price for your marketing agency?
How does a marketing agency price its work?
There are several elements to how a marketing agency price is established. Each cost can be influenced by elements like markets, project size, scope, location and sector, among others. When looking to procure a marketing agency, you will need to assess each of these factors carefully and find smart ways of negotiating the right price for your brand and campaigns.
On the other side of the fence, there are some key considerations that will likely influence a marketing agency price model and how they established their rate cards. These include:
- Scope of work – poorly scoped work resulting in unpaid work or extra work that isn’t included in the original costing
- Talent – securing the right talent to handle the campaign and the client
- Margins – ensuring that the marketing agency doesn’t undercharge for work
- Competitors – rate cards built on competitor pricing models that may be either too high or too low
Then there are the different types of marketing agency price models…
The retainer-based pricing model is similar to fixed fee pricing in that it is a set fee on a regular basis, only in this case it is monthly and contractually paid for a set period of time or a set number of deliverables.
The project-based pricing model is also pretty self-explanatory and tends to be a once-off cost for campaigns and projects that are scoped right to the edge. Every detail and element costed to ensure the agency and the brand get value for money.
The fixed fee pricing model is exactly what it says on the tin- a set fee for a collection of services. This is generally used as part of a retainer or ongoing engagement that allows for costs to be offset and managed across different months and campaigns.
The performance-based pricing model which is often confused with the value-based model. This model is based on the actual output of a campaign.
The value-based pricing model which is complex to manage and price and can end up delivering less value for both agency and brand if not managed correctly. In a nutshell, this type of pricing platform is focused on what the brand believes the marketing agency delivers in terms of value.
What about the Marketing Agency Price Rate Card?
Marketing agency rate card prices differ wildly. A marketing agency price will be unique to each of their clients, without a a ‘one size fits all’ solution. Looking at the different factors that go into establishing a marketing agency price, can highlight why one agency may have different complexities and considerations when building its pricing compared to another marketing agency.
For marketing procurement, this makes the pricing situation complicated. How do you choose your marketing agency? You could just choose the first agency to provide you with a quote that fits your budget, or you could spend hours sifting through every single rate card trying to figure out which one is the best value without compromising on quality. After all, most people know that often cost is aligned with quality and that a low initial expense can end up being a false economy when you have to redo a campaign or spend more money to fix the problems.
The thing is, a marketing agency’s rate card doesn’t offer much clarity into what you’re actually paying for the work. There is limited insight into why one agency in the same market for the same campaign charges less than another that appears to be operating within all the same variables. There isn’t always a lot of visibility into the real value the rate card claims to cover, for example idea generation, strategic guidance and senior creative talent management.
The best way to resolve this conflicting information is to benchmark your marketing agency price.
Benchmark your marketing agency price realistically
Benchmarking can be of immense value when looking at your budgeting and strategy as well as your marketing agency price. But, only if it is done with negotiated rates across a broad spread of marketing agencies, markets and industries. Using a wide net, will deliver far more meaningful results from comparing marketing agency price benchmarking, using live data that has been externally sourced and compiled from across global markets and agency disciplines.
RightSpend’s benchmarking platform does exactly that. It uses data complied from more than 75 global markets and 10 different agency disciplines to provides you with the information you need to have meaningful conversations about your marketing agency price and the nuances that make each agency offering different.