How to Price Your Inbound Marketing Services with Blair Enns
Blair's background in the agency world, first as a consultant and now as a sales trainer gives him insights about what inbound agency owners can do to close bigger deals.
In this interview, Blair explains the 4 step process to pricing, the pros and cons of customized vs. productized pricing, and why you should test out results based work.
Customized vs. Productized Pricing
In the agency world, there are two primary ways to handle pricing, customized and productized.
Productized is where you have a set bundle at a certain price, for example, a package that includes four blog posts a month, eight social media posts a week, etc. This is what many agencies do offer and sell. It focuses on features.
The other is customized pricing. This is where the price of the service depends on the unique needs of the client. The services that are delivered are specifically tailored and adjusted based on what is needed. The focus is on value.
Each option offers pros and cons.
Productized services are much easier to scale and manage. It's simpler. However, you're more likely to seen more as a commodity and interchangeable, and your rates are set.
Customized solutions are much more time and labor intensive. You've got to uncover the need, create a plan how, and execute. You'll sometimes be without at roadmap on what you're doing next and need to adapt. However, you can charge much more for customized pricing.
From Brian's experience, many inbound agencies look and sell the same way and at the same price. There is nothing particularly distinct about the inbound agency. Brian believes this is because many agencies take the lead from Hubspot and copy what they see. This doesn't make sense since Hubspot is a SAAS company. They sell a totally different type of solution.
His advice is for agencies to go customized and solution based pricing and selling to increase their revenue and profit.
The 4 Steps to Pricing Your Value
1. What is the Desired Future State of the Client?
Dig in and discover what the client wants the future to look like after you've worked with them. Go in with an open mind and ask a lot of questions. You are trying to uncover their business objectives and what they're looking for. They're not buying blog posts; they're buying branding, lead generation, etc.
Don't go into a pricing conversation relying solely on past experience.
Go in with an expert mind but with a beginner's mindset. Listen and ask questions.
Clients aren't buying blog posts from you, they're buying an ideal tomorrow in their business.
Uncovering the future desired state, helps you more effectively sell and price your services.
2. What are Measurements of the Desired Future State?
Discover what it feels or looks like for them to be in this future state.
Are they in the office less? Can they afford a company trip to Cancun? Are they winning awards for their branding? D they want a lot of PR buzz for an event they're holding? Are sales up 40%?
You need to identify what will indicate to them they've reached the future step. What it feels like. Once you've uncovered this state, uncover how they measure this.
3. What's the Monetary Value of Reaching this Desired Future State?
This flows right from measurements into what is the dollar value of getting them to this state.
What amount of money would they need in their business hit for them to hit this future state? Is it another 200k in revenue by the end of the year?
If you improve lead generation for them, what extra dollar amount of new business would make them happy?
What dollar amount shows them they've reached this desired future state?
Using this dollar amount, you have a benchmark to determine what they'd be willing to pay.
4. What are You Willing to Pay for this Desired Future State?
What would they be willing to pay for this state? Get the client to give you a guide on this.
If you want to increase revenue 200k, what would you be willing to invest to get there?
This way, the client sets the value. From this number, you can start working.
So if the client says they'll pay 75k for that 200k number, well, you can charge 50k for somewhere close to 200k.
Since you can't guarantee (usually) that you can hit those exact numbers in the exact time frame, you discount for risk.
This way though you also get the highest paid for what it's worth. Once you have this, come back with answers and how you'd get them to this state
Once great extra tip of doing this is to include different price levels for the client to choose from. The premium price gets them closest to their desired state, but the others are lower priced options.
Using this method, you're often able to get them into the middle package at least. The conversation isn't "yes or no?" on price but "which level gets me the most for what I'm looking for at the price I want?"
Brian goes into other aspects including guaranteeing results and the importance of innovating. He explains why agencies need to test out results based clients.
This interview is packed with pricing information that any serious agency owner needs to be aware of. Getting good at pricing and valuing your services will make your agency more profitable and fun to run.
If you're intersted in connecting with Brian, you can reach him on Twitter. If you enjoyed this podcast, leave us a review on iTunes!