How Agencies Price Their Work

As a startup, understanding how an agency builds its pricing, will equip you with the understanding to set a scope of work more accurately, agree on a budget quickly, and help you be a better partner overall. That’s why this week episode 45 of the FiredUp! podcast is about how agencies price their work. 

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In this episode of the FiredUp! podcast, McLintic shares the pros and cons of the 3 main agency billing models: time-based, deliverables-based, and value-based, so that you can know where the agency is coming from and foster a successful partnership. 

Morgan discusses:

• The most traditional and fading in popularity is time-based pricing which involves buying the time of the agency’s team members and billing clients based on hourly rates.
• Requiring a bit of upfront work to set expectations, deliverables-based pricing is a great model that focuses on buying a specific output or scope of work. 
• In a more complex model, value-based pricing aligns the agency’s pricing with the value of the outcome they create for the client. 
• Some agencies may also generate revenue from other sources such as IP and markups on third-party costs. 

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Chapters

• 0:00 How Agencies Price Their Work
• 3:11 Billing models for agencies, including time-based, deliverables-based, and value-based.
• 7:13 Pros and cons of time-based pricing models in marketing agencies.
• 14:28 Pros and cons of deliverables-based pricing models.
• 18:32 Pros and cons of value-based pricing models.
• 22:43 Agencies may also generate revenue from IP, software, and markup on third-party costs.