Brand Agency Fee Structure Case Studies
Two case studies that were built around brand agencies are Grow and Convert and Lead Quizzes. For the former, the circumstances that led to the change in their pricing model was the need to fill an industry gap and offer a premium service, while for the latter, it was the need to lower price so that a considerable risk would not be tied to one client. Their pricing model and uniqueness are discussed further in the below findings.
Grow and Convert
- For this brand agency, a gap in the industry and the need to offer a premium price for their services led to the change. The founders of the company believe that if brand positioning is off, it doesn't matter what is presented to clients because they won't pay for the services.
- As a result, they needed to differentiate themselves from their competitors, and "position themselves as a premium service instead of being lumped in with all the other service providers out there."
- The agency, therefore, defined four criteria to determine their brand positioning. These criteria are the target market, pain points to solve, service uniqueness, and proof of the first three.
- Grow and Convert wanted to position itself as a brand agency that can "produce educational content that would be interesting/useful to the audience, drive traffic to it, and measure the results — essentially own the entire channel and be held accountable to results."
- Agencies offering skeletal parts of these encompassing services already charge between $6000-$10,000 per month. But clients want a content marketing service (CMS) that can provide these encompassing services and are ready to pay a premium for it.
- Providing the encompassing services on the low end will cost an average client about $100,000 a year, and about $500,000 a year on the high end.
- The famous saying that "price is a function of the perceived value of your service" is not lost on the founders of this agency.
- While some agencies are charging as much as $500,000 a year, Grow and Convert started their high-end services with $6,000 per month, which translates to $72,000 per year. Regardless that this fee was a steal compared to the actual cost, the company started with this pricing because they were without a client base. More so, this pricing enables them to explain their "value proposition in a sales call pretty well."
- The founders of the agency know that with their competitive price and better service delivery, clients would troop to them inevitably. Today, the company has successfully created new viable service offerings as other agency owners ask them how they get to charge $8,000 per month from clients for their services.
- The uniqueness of the change was that instead of following the bandwagon, the company focused its attention on building the service that filled an industry gap, where clients are willing to pay a premium.
- Another innovation about this change is its structured on three uniquenesses, which ars the accountability of the company to leads generated for clients, the ability to cover advance topics, and solid promotion strategy, such as "community content promotion, paid Facebook promotion and targeted link building for SEO."
- As a brand agency, Lead Quizzes offers services such as "web design and development, advertising on Facebook, Google, and LinkedIn, landing page creation, copywriting, marketing automation, and shopping cart customization."
- When it started, the company considered itself a 'full-service agency', because it believes it can solve all the digital marketing problems of its customers. After completing a few projects for clients that they can place a reference to, they upped their game and started charging clients between $3,500 a month to $10,000 a month.
- But, the company couldn't ensure consistent results for clients because of their diversity, and there were no metrics to measure the satisfaction or otherwise of their clients.
- Sometime in 2015, the company lost "three clients that accounted for 35% of their monthly revenue." Things started to go wrong and became worst when it couldn't replace the lost clients.
- Realizing how they have fallen short from being a profitable company to losing five-figure amount overnight, the owners resolve to make changes that included the need to work with "a larger number of clients at a lower price so that no one client would become a huge risk for the business."
- Informed with the knowledge and experience that its sales process was atrocious, Lead Quizzes structured its pricing by productizing its services. This new concept involves "knowing the clients' business, research what they wanted, how much time it would take to fulfill the work, create a proposal, and then hope that they could close them."
- Therefore, instead of a custom project, the company offered a quiz funnel that "would generate leads and drive people to its offer." The quiz funnel entails the following process: from 'Facebook Ad' to 'Quiz start-page' to 'Quiz' to 'Opt-in page' to 'Results page,' and finally to 'Call to action.'
- Through this quiz funnel, the pricing is broken down into two steps. The first step is to "manage ad campaigns and optimize quiz funnel" for the client at an investment cost of $2,000 per month, out of which $1,000 can be deposited first as the monthly fee to manage ad campaigns.
- The second setup is the waiver of the setup fee to "write the client's quiz, get it set up on the company's software, integrate it with client's CRM and make sure everything works." But this second step involves the upfront payment of the $1,000 ad management fee.
- The setup is expected to "take less than 14 days, and the client won’t be rebilled the second monthly management fee until 45 days" have elapsed. For the speedy completion of projects, the company also incorporates a policy that automatically rebills clients 30 days after their 14-day setup was completed. This has made clients energetic in putting things in place at their ends against their prior lackluster attitude.
- In a situation where the client paid early enough for the setup, the company would commence "running Facebook ads early at no additional charge," and this makes the client feel good. Today, the company now closes about three clients a week, which has contributed to a turnover of $720,000 in revenue a year.
- The change in the pricing model of Lead Quizzes is considered unique because it centers on an integrated online pitch delivery. So, what clients get to see first in terms of the company's pricing is "so normally we charge $5,000 to set up a marketing campaign and $3,500 per month to manage the ads and optimize the funnel..." Afterwards, the clients see the two steps broken down and considers that the actual lower price has been made affordable for them.
- If a client objects to the payment of the $2000 fee a month, another integrated online pitch is on standby to encourage the client to commit. Some wordings in between the pitch goes thus, "you said that you earn $1,000 per customer...., based on the lead costs you shared with me, .....we would double the number of leads you generate a month, and you would only need to close X% to pay back your investment."
We started our findings by looking for companies that fit the profile of our case study. After concise research, we found two, namely, Grow and Convert and Lead Quizzes. Our analysis of the companies was drawn from the accounts of their founders.
For each company, we were able to describe the circumstances that led to the change of their pricing model, how the pricing was altered to create new or more viable service offerings, and how the change was considered unique.