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Name Your Price: Strategies for Your Agency or Freelance Business

Struggling to price your services? These strategies and tips from the 2022 Mailchimp & Co Benchmark Report can help.

“How much should I charge for what I do?” is one of those enigmatic questions like “How long is a piece of string?” But when it comes to your business, it matters, because everything starts with pricing. What kind of business do you want to run? Large or small? Do you want to work alone or attract top talent? Engage clients worldwide, or keep a local focus? Every business owner has a different plan, but they’re all downstream of the figure they quote their clients.

One thing to think about when pricing your services is that some clients like to have options, and offering them can pay dividends. In our 2022 Mailchimp & Co Benchmark Report, a survey of more than 2,000 freelancers and agencies, only 24% of responding freelancers said they offered clients 3 or more price points when presenting a proposal, and the majority of those picked up over 20% more new business than those who reported offering only 1 price point. The bottom line? Many freelancers and agencies could be leaving money on the table.

If you’re a freelancer or work at an agency, are you taking advantage of pricing strategies that can help you learn how to generate more revenue while remaining competitive and keeping customers happy? Below, we’ll review a few pricing strategies—and a dynamic, value-based pricing model that can help you learn how to take your business to the next level.

Priced to go

Even if you haven’t consciously strategized about freelance or agency pricing, you’re probably already familiar with a few pricing options if you’re running a business.

  • Hourly pricing: This model is straightforward and prevalent in service-based industries like marketing. Document your hours worked and expenses incurred, then charge accordingly.
  • Cost-based pricing: Add up the cost of materials, labor, and other overhead, add a markup, and you’re set.
  • Fixed pricing: Assess the project at the beginning, factoring in your markup and some wiggle room for contingencies, and present a figure to your client.
  • Performance-based pricing: A less common model that sees the agency or freelancer make money based on performance factors like product sales or website signups.
  • Retainer pricing: Agree to a negotiated fee up front for a set amount of time or deliverables.

But in all these calculations—labor, overhead, markup, expenses—what’s your work really worth? At the end of the day, you’re not really selling your time and materials; you’re selling your specific expertise and experience. That’s worth whatever someone is willing to pay, which is otherwise known as value-based pricing.

So, what is value-based pricing, anyway? Instead of adding up your costs and tacking on a markup, value-based pricing is generally derived from the perceived value of a product—and if your work is vital to your client’s success, then your value may amount to more than the cost of parts and labor. Whether you’re working on a one-off project or a long-term retainer, you need to ensure your billings reflect your actual value.

To rethink how you price your services—and ultimately, charge more for them—consider following these steps:

  1. Start at the core. Look at your primary offering. What is it? How much are you charging for it? Are you leading with your core offering when you pitch clients?
  2. Do your research. Find your direct competitors and what they charge for the same service. Every market is different, so there’s no hard-and-fast rule for pricing. Value is a relative term, so you need to factor in your overall landscape when calculating yours.
  3. Decide how to stand out. Identify the unique offering that differentiates you from your competitors. Are you more of a specialist? A generalist? Do you have deep experience in specific business verticals? If you can’t think of anything that makes you stand out, could you add a new, in-demand skill that helps set you apart? Training is a great way to do this. Consider joining Mailchimp & Co, if you haven’t already, and earn your Email Automation certification in Mailchimp Academy. These courses are free to take and can add substantial value for your client.
  4. Test and learn. Now that you’ve identified your unique value proposition, decide what your clientele would pay for it and price accordingly. Naturally, this will be a bit of a process: Pitch too high, and clients may balk, but if you’ve been honest with yourself (and them) about the value you can deliver, they likely won’t.

Something to consider: It may seem counter-intuitive, but it’s not necessarily a good thing if you’re winning new business every single time you pitch. It could be a sign that your rates are too low, and clients are benefiting from your services for a steal. If you find yourself on a winning streak, think about how to increase your rate—hourly, value-based, or otherwise—before you deliver your next pitch.

How to raise your rates

Like figuring out how to price your services, changing your rate is a process, so you’ll need to experiment to see what price points are delivering the best outcomes. Again, honesty is key: Pitch your true expertise for the price you think is fair, and explain your reasoning to your clients, both existing and prospective.

Here are 5 strategies that can help you earn more without overhauling your business.

  1. Be specific. Don’t leave too much wiggle room in the project scope, or you’ll soon find yourself taking on work outside of what you thought was your responsibility. Be precise and unambiguous when you scope a project so you can get paid for everything you deliver.
  2. Deliver the goods. Perhaps it goes without saying, but if you’re the best at what you do and you can prove it, you can price your services accordingly. Remind your clients that you deliver outcomes, not outputs. Position yourself as an indispensable partner in their success and back it up with the effort and expertise they’re paying you for.
  3. Update regularly. Time flies and prices change. You have to invest in your business if you want to grow it. New employees, pay raises, and new tools all cost money, so revisit and adjust the numbers at regular intervals to help keep your accounts in the black.
  4. Give them choices. As was mentioned above, if you offer prospective or existing clients 3 or more set price points for different sets of services, it could help you unlock more profit and optimize your value.
  5. Stick to your quote. You work hard, and your labor is valuable, so don’t undercut yourself. And if your client thinks your budget is too high, you can try offering them a lower tier of services (see step 4) that’s within your set price points. If that’s still not working, thank them for their time and politely walk away.

The bottom line

While there aren’t many one-size-fits-all solutions in business, you can learn how to earn more money by using proven strategies without reinventing your processes. Whether you work as a freelancer or run an agency, adopting a value-oriented business model can help you better assess the market value of your work and expertise. But really, the best model is the one that works for you—one that gives you the power to generate more revenue, provide better pay for you and your staff, and, ultimately, uncover a path to continuous growth on your terms.

Our value proposition to you: Join Mailchimp & Co

Our community of like-minded and supportive marketers is committed to helping freelancers and agencies like you do your best work. Join us today and unlock a wealth of tools and resources that can help you up your marketing game—and your value to clients.

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