Maybe you’ve never hired a marketing agency before, or you want to brush up on what to expect in terms of pricing models before you start your search. Some agencies offer only one type of pricing, but most will offer clients the option to work in a variety of different ways depending on their needs.
Before you reach out to a marketing agency to talk pricing, it’s best to know the pros and cons of each model and have a rough idea of which type of pricing would work best for your goals and budget. Here’s a primer on the most common pricing models and the pros and cons of each.
Hourly rate model
The most basic pricing model used by agencies is the hourly rate model. As you’ve probably guessed, with this model you pay for every hour of time you use. One nice thing about hourly rate models is that you have flexibility to use the number of hours you need each month. For instance, in January you may decide you want to use four hours for a small email project, while in February you’d like to engage in six hours of strategy work and have the agency spend ten hours of work on deliverables.
This may seem straightforward, but there are some downsides to hourly work with agencies:
- You’ll usually pay a higher hourly rate than you would if you were on a retainer or subscription basis.
- Many agencies have an hourly minimum because it’s just not efficient or profitable for agencies to piecemeal out hours. For this reason, some agencies don’t even offer this option.
- Your projects may go to the end of the line priority-wise because agencies always fill up their schedules with retainer clients first.
If you engage an agency on an hourly basis, it is best to communicate regularly and give plenty of notice for new projects or changes to scope.
Pay-per-project model
The pay-per-project model is a great way to test out an agency and see if they are the right fit for you before jumping into a longer-term commitment. With this type of pricing, the agency will gather information about the scope of your project and provide you with a quote for the entire project, including drafts, meetings and final deliverables. Per-project pricing is perfect for marketers who only need help with one or two very specific projects per year. It can be a flexible option for shorter-term projects.
As you probably guessed, there are some downsides of the pay-per-project pricing model.
- You are confined to the scope of the project as it is quoted. If you happen to change gears midway through (which happens quite often), you may rack up additional fees for working outside the scope.
- You won’t have much flexibility to use time for strategy and really leverage the expertise of the agency to discover new ways to optimize your deliverable.
- Pay-per-projects generally take more time to get off the ground, since each project requires a written scope and a signed proposal prior to kickoff. This can significantly affect timelines and slow down the schedule.
Retainer/subscription model
The retainer/subscription pricing model is when you pay a set fee per month for a predetermined amount of agency hours/services. Each month, the agency commits to having its team available to you for marketing tasks or projects that fit within the scope. Projects are completed on a rolling basis so momentum is never lost. This is the ideal way to work with an agency over the longer term. It saves time because there is no need to wait for a scope of work and proposal to be drawn up for each project and it allows you to realize the full breadth of services an agency can offer. This model also offers a ton of flexibility in how you use your hours each month and you are not penalized for switching gears mid-project.
Retainers/subscriptions are ideal for those who really want to stay consistent with content marketing efforts and utilize the full breadth of expertise provided by the agency. This setup is also ideal for long-term projects.
As with the pricing models listed above, retainer/subscription pricing isn’t for everyone.
- This model is not ideal for teams who only need help once or twice per year or don’t have a dedicated person who can act as the agency’s point person internally. A single point of contact allows both the agency and your team to efficiently communicate projects smoothly and achieve set goals.
- You run the risk of having funds go unused in any given month if you don’t communicate with the agency regularly or if you run into internal snags that slow your project progress. Most agencies are great at navigating these hiccups to keep work moving and some agencies will allow you to put your subscription on pause or rollover funds to be used in another month. It’s always worth asking!
Other pricing models you might run into
Commission-based pricing is usually reserved for marketing agencies that place media buys. If an agency completes the media buy on your behalf, they may charge you a commission based on the cost or amount of advertising purchased.
Hybrid pricing models might include a subscription for a certain amount of monthly support with an option to add hourly or project-fee pricing for anything that falls outside the standard recurring subscription in a given month. This pricing model works well for marketers who know they will have a base amount of content to complete each month, but will also have a few special projects throughout the year.
Ready to price out a marketing plan that works for you?
We have a dedicated team of writers, designers and strategists on standby ready to put together the perfect pricing model to help you realize your marketing dreams. Not only do we offer flexible pricing models, but we publish our subscription pricing and our project pricing right in plain sight, so you have all the information you need to define the right fit. Contact us here with all of your agency pricing questions!