When was the last time you looked at your prices? Like, really looked at your prices. I’m not talking about a 10% increase. I mean starting from scratch.
Agencies, like most (all?) professional services businesses, are people businesses. So most (but not all) price their services based on this cost-input and land on an hourly rate that pays for salary + overheads + margin.
Tying the number of employees directly to revenue has an impact. A significant one. A sample of public agencies has the number of employees required to generate $1m at between 5.2-6.5. The S&P 500 sits at 5.1. Google and Meta sit at 0.66.
Irrelevant because they’re totally different business models right? I don’t think so – I think it’s indicative of a commercial problem. Professional services companies, and agencies in particular, force themselves into this position, where in order to scale you need to hire more (increase costs) in a 1:1 relationship.
Doing away with hourly models and shifting to pricing based on the value your agency brings to the relationship can help break this link.
Marketing/advertising is one of the few expense items on a P&L that actually generates revenue. Shifting the conversation away from cost to the value generated can help your agency to be paid what you’re worth.
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