Whether or not your agency’s pricing is on point is a pressing question when dealing with a potential client.
How many times have you found yourself thinking that you sold your agency short?
Or been anxious that the client won’t accept your fee?
Maybe you’ve been caught in endless and disappointing negotiations where the value was lost altogether.
Pricing feels like a black box. As markets continue to shift and SEO services diversify, setting a benchmark gets fuzzier and fuzzier.
But it doesn’t have to be that way.
After all, it all boils down to two important things – the right balance between a good profit for your agency and a good deal for your client.
What’s Behind the ‘Right Price’?
To determine what good profits and deals look like without the inherent subjectivity, you need to go back to the drawing board and analyze three important components: cost, price, and perceived value.
You also need to understand the relationship between them:
- Your incentive to sell is defined by the difference between cost and price – you don’t want to cover just your costs but make a profit.
- The client’s incentive to buy is defined by the difference between the perceived value of what you’re offering and the price – how your client perceives the value of your services informs their willingness to buy them.
Get too close to the operational costs with your pricing, and you’ll lose the motivation to make that sale.
Get too far out into the perceived value with your pricing, and you might lose the client if they perceive the agency as too costly.
It’s a balancing act to determine the sweet spot for your price, between the cost and the perceived value.
It’s also a question of who gets the most value out of your agency services, so as to create a relevant threshold, and how to create a data-driven benchmark to determine the most effective margin with available search data.
Let’s take them one by one.
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