From hourly rate battles to premium positioning: The evolution of agency pricing

[shaownhasane]

Donna Mostrom, founder and CEO of copywriting and israel b2b leads content creation company Damn Smart Marketing, has over 15 years of client and agency experience. She shares her insights for agency owners looking to optimize pricing, improve client retention, and grow their agency.

When Donna started freelancing in digital marketing, she admits she was in survival mode. Without a full-time job, Donna needed to find work and clients as her family moved for her husband's job. This desperation led her to severely underprice her services to attract business.

Additionally, Donna made the common agency mistake of pricing by the hour and not accurately tracking her time or calculating costs. As she further expanded her services to attract more clients, Donna was stretched thin in terms of time and profits. She was tired and frustrated by the low returns and unsuitable clients of the hourly fee model.

Donna needs to identify her target audience and ideal customer. It was only after she hired a business coach to guide her that her pricing model began to shift. With the advice of her coach, Donna identified mid- to large-sized B2B companies as her ideal clients. These resourceful clients are willing to pay top dollar for professional, high-touch marketing services.

The high rates also discouraged small businesses from hiring her because she wanted to limit her workload.

Now that her ideal client is in the spotlight, Donna feels empowered to position her company at a higher level. She and her husband undertook an extensive rebrand of the company and improved services, becoming industry experts in content creation and copywriting.

In addition, Donna designed tiered pricing packages to reflect the premium value her agency could provide, her target hours, projected earnings, and work-life balance preferences: