Digital Marketing Agency Pricing Guide: How Much Should You Charge?

As an agency owner, you must make sure that you are making money. The increasing competition in the digital marketing industry is pushing down prices, and it calls for competitive prices to be introduced by the agencies. However, if you don’t make a profit, you will soon find yourself struggling as an agency owner.

Criteria to Be Used to Determine the Prices in a Digital Agency

It can be the biggest challenge for the startups, yet as a general rule, the prices charged by you should cover the overheads and the cost of the service provided. So, the pricing model should entirely be based on the services you provide.

If you are curious to know how much you should charge, our digital marketing pricing guide will help you immensely. Please remember that these charges are applicable for the year 2021.

If you intend to charge your customer regularly, the average price should be anywhere between $2,500 to $12,000 per month. The hourly charges would vary from $50 to $600 per hour. The minimum amount for a project would start from $1000, and it applies to small to midsize companies.

How to Determine a Reasonable Price?

With so many price models available, you will likely find a considerable variation in the rates. It makes determining reasonable prices for your services a challenge. These variations in the rates may expand further when you outsource your work.

Companies and agencies that outsource from third-world countries have an obvious cost advantage over their rivals. They can quickly drop their prices significantly without compromising their profit margins.

How should you determine the prices that don’t go beyond customer expectations and still cover your operational costs in such a scenario?

Let’s consider two major factors to help you decide the prices you should charge as an agency:

1. Your overall operational cost

2. Agency pricing model you want to implement

1. What is the Overall Operational Cost of Your Agency

There are several expenses you should consider to determine the overall operating cost:

A. Office Expenses

It includes some basic expenses such as furniture and equipment, rent, maintenance, merchant fees, office supplies, etc.

B. Production Expenses

Professional digital agencies spend on team management software, CRM, SEO, digital marketing tools, social media tools, cameras, projectors, etc.

C. Workforce Costs

Staffing cost includes salaries, perks, benefits, insurance, training expenses, and bonuses.

D. Business Setup Fees

Licensing fees, corporate taxes, attorney’s fees, accountants and book-keepers, consultant fees, etc.

E. Additional Expenses

Online marketing startups also need to spend on advertising, travel, accommodation, etc.

2. Agency Pricing Model You Want to Implement

You have a wide range of choices available to make digital marketing pricing plans. Some of these options are as follows:

• Hourly Charges: Charging hourly rates is the simplest form of pricing when you are unsure of the time needed to complete a project. Make sure the hourly charges cover your operational costs. Remember to keep a few extra hours as a buffer. It helps the clients to stay within their budget.

• Project-based Charges: If you have the required skills to execute a project, you can charge based on the project. Developing a social media ad campaign or managing online reputation campaigns falls under this category. With new clients, the strategy works best because once they get satisfied with your performance, you can go for more extensive projects with recurring fees.

• Retainer Prices: Once you can build trust and establish rapport with your client, you can charge retainer prices, where the deliverables are predefined. Such pricing gives the agency the actual financial strength it needs — the capacity to survive without any external assistance as you start earning a regular monthly income. However, make sure your price doesn’t sound too expensive to the clients.

• Recurring Pricing Model: This is one of the most common pricing models, especially for long-term projects such as SEO projects. Since SEO takes a lot of time to deliver results, which easily stretches from months to years, it marks the beginning of a lasting relationship with your clients and steady income.

• Performance-based Pricing: It is the riskiest pricing model often adopted by reputed agencies confident of their expertise and ability to deliver results. It may be related to sales, conversions, or traffic on the site. However, it would help if you were prepared to provide the right metrics to support your claims and the efforts you have put in. Performance-based pricing is easy to scale, and hence it helps you exert influence and the client’s business. However, it is a significant drawback; you won’t get paid if your agency cannot perform.

• Value-based Pricing: Such a pricing model is adopted by the agencies that are confident of providing value to the client’s business or are convinced that they can solve their intricate problems. It is challenging to implement because agencies can’t achieve challenging goals consistently.

• Customized Pricing: This type of pricing is applicable when you charge for different services offered within the digital marketing domain. It is one of the most transparent and affordable pricing models, which allows you to tailor your services according to the client’s needs. It makes it easier for you to charge on an hourly basis and adopt the recurring price model.

What Determines Digital Marketing Pricing?

We are going to discuss the different factors that determine digital marketing prices in the section.

It would help if you remembered a simple formula for pricing, and that is:

Cost + Markup = Price

The cost of the services includes the hourly charges of the experts, administrative fees and office expenditure, and money incurred on buying expensive software and tools. Digital marketing pricing packages also include markup prices. Markup is the money you make on the services provided.

It usually is 20% to 50% of the service cost. This amount is variable, and the discount is offered from the markup only. If you face difficulty determining the markup price, estimate the value you provide to the client, and you will easily do it.

While this holds for SEO services, the PPC pricing may be entirely different. The PPC charges include the percentage of the ad spend, so you can easily mess up these deals. The project may involve more than one contractor, i.e., a copywriter, a content manager, a graphic designer, a video editor, and an ad manager.

It makes it difficult to calculate the actual cost of service. It is up to you to figure out the right pricing strategy in such scenarios. It can be hourly or campaign-based pricing, whichever suits best for you.

How to Price Social Media Marketing Services?

Knowing how to price your social media marketing services is instrumental for your success as a digital marketing agency. Social media is vast, and your presence on the platforms your audience uses the most determines your success. Posting engaging content regularly on these social media sites requires teamwork.

Agencies hire freelancers and full-time employees to manage their clients’ social media accounts and provide value. Agencies markup the cost of the services they provide when billing their clients. According to the pricing structure discussed above, they may add a markup of 20-50% of the service cost. For premium agencies, this charge maybe even higher.

To determine the cost, you need first to figure out the roles and costs associated with your social media account management team. Hire content managers, graphic designers, and video editors and estimate the cost of hiring their services for your clients’ social media projects. Add the desired profit margin to it to calculate the prices you can charge.

Formula to Calculate Social Media Agency Pricing

The actual cost of hiring social media professionals and designers + cost of the software & tools being used + your profit margin = PRICE a digital agency should charge for a social media project

Social Media Management

To determine the average cost of social media management, you must know the different tasks associated with it and the roles you’ll need.

• Different tasks associated with managing a social media account:

  • creating content

  • providing customer support

  • monitoring conversations

  • analytics

  • working with influencers

  • community management

  • running paid ads

• Social media roles you will need:

  • strategist

  • ad manager

  • scheduler

  • creative director

  • copywriter

  • designer

  • video editor

  • proof-reader

  • analytics reporter

One Time Account Setup Fee

Every account needs a one-time setup apart from the recurring services. Setting up a social media account is an essential service because it carries the essence of your branding. It would help if you considered everything from the tone to the organization’s colors, graphics, and mission statement while setting up an account.

It might also involve creating a video cover, profile image, cover page, featured images, and short and long bios. Apart from these, you may also need to create a business manager account and possibly a group.

Therefore, agencies also charge a separate one-time account setup fee.

Social Media Marketing Pricing For Ads

Social media ads management is also an essential service to consider, especially when determining SMM pricing. It involves managing ad spend, setting up the ad campaign, and making it a part of the comprehensive social media strategy. Again, you need an entire team of experts to manage social media ads just as you need it to manage a social account.

Here is an example:

An agency charges for social media ads in this fashion.$500 flat rate + 30% of ad spend (If the total ad spend is less than Rs. 3000/-)

If the ad spend is above 3K, then a percentage fee replaces the flat rate.

A % rate of the ad spend + 30% of ad spend (If the total ad spend more than Rs. 3000/-)

You would also need to charge for image creation (shooting) and editing for social media purposes if the client doesn’t supply stock photos.

Don’t Undervalue Your Social Media Services and Pricing

The pricing depends on the value an agency offers to the client, but most of the time, social media agencies undervalue their services and charge a meager fee. If you know the worth of your services, you can always set a reasonable price.

Apart from connecting businesses with their customers and building a community, social media does much more than one can expect. It also helps create brand awareness, increase customer satisfaction and brand loyalty, generates leads, boost sales, and retain clients. Social media also brings quality inbound traffic.

Roles to Be Filled In

To figure out roles to be filled in and the number of hours needed to complete the job is necessary to execute a successful social media campaign. The next step is to decide the markup, usually 20% to 50% of their costs. Keeping some margin in the markup will provide you a cushion against unexpected expenses.

Here is an example:

• The cumulative cost of the contractors/freelancers is $50 an hour.

• Agency charges $70 to $75 an hour.

• It equals a 45-50% markup so that the agency will make $20 to $25 per hour in labor costs.

• Contrary to smaller agencies, the premium agencies may charge anywhere from 70-150% markups. However, they need to deliver exceptional quality to justify the prices.

You need to create platform-specific content to deliver value and drive results for your client. In the digital marketing industry, you can charge according to the quality you provide. Hiring experienced and trained contractors will always be advantageous if you don’t want to start from the bottom.

How to Price Website Design Services?

The same formula is also applicable to calculate the price of web design services:

Cost + Markup (profit margin) = Price

Website design is a multi-step process, which makes its pricing a bit complicated.

Here, too, tasks, job roles included, and markup will decide the ultimate cost of the project.

There is a difference between website design and website development. The former has to do with the user interface (UI), and the latter is more related to User Experience (UX).

How Much Should I Charge to Create a Website?

To determine the price of web design, you need to consider the following two factors:

1. The amount of work required for web design

2. The amount of value it will provide to the client

Here are the elements of web design services:

1. UI design

2. UX design

3. Graphic design

Ongoing Maintenance of a Website

The ongoing maintenance of a website should also be considered when figuring out the cost of web design. It includes code maintenance as well.

So, the simple formula you can use to calculate the cost of web design is:

Cost of web design = [Hourly rates of the designers and developers + Web hosting and domain registration fee and taxes + Hourly rates of other contractors such as copywriters, graphic designers, and video editors]

To reduce your expenditure on hiring website developers and designers, try hiring white label web design services. You’ll be stunned by the results, convenience, features, and prices. White label web design services have the following features:

1. Easy drag and drop editor

2. Self-service maintenance

3. Hosting and SSL certificate

How to Price PPC Services?

For PPC, experts recommend charging a flat price until the ad spend is less than $3000. It can be anywhere between $450-$750. When ad spend exceeds $3000, you can charge between 13% to 30% of the total ad spend.

You can lower down the percentage you charge as the ad spend grows. More ad spend doesn’t mean more clients or more business. It’s just that the financial strain has increased on a single client. So, it would help if you didn’t charge more.

If you don’t have a PPC expert on board, you can hire freelancers from sites like FreeUp or Upwork, but finding the right contractor who can deliver results is extremely difficult. So, the best solution is to hire white label PPC services. Reputed white label companies are known for their consistent performance and ROI so that it can be the safest bet yet the most affordable option for the agencies.

How To Price SEO Services?

You can use the standard formula to price SEO services:

Cost + markup = price of the SEO services

Generally, agencies markup on SEO services ranges between 20% to 50%. Add contactors’ fee, i.e., $50 an hour, to a 50% markup price, and it comes to $75 per hour, which is, on average, the final cost to the client. So, you make $25 an hour on SEO services from a single client.

Premium agencies usually charge a 70% – 150% markup, and most businesses can’t afford that.

Again, there are three significant types of SEO services:

1. Off-Page SEO

2. On-Page SEO

3. Local SEO

SEO requires a lot of activities and effort. Collectively, you should pay an average of $50 for all of these tasks. However, the price is not carved in stone and can be increased or decreased a bit.

The essential elements of SEO are:

1. The site structure

2. A secure HTTPS

3. The page speed of the site (A critical ranking factor)

4. A Robots.txt file (A file that prevents Google spiders from tracking specific content)

5. Keyword strategy

6. Removal of duplicate and thin content

7. Internal linking strategy and creating topic clusters

If you want to impress your client and rank #1 on various search engines for multiple keywords and search terms, try hiring DashClick’s white label SEO services. With access to the white-label dashboard, you’ll also receive automated white label SEO reports that will save your time and efforts.

Conclusion

Making a cost evaluation and establishing a budget is crucial to ensuring profits in an agency business. Most often, the prospects don’t know what they want. A consultation and assessment of their budget are essential before you offer them online marketing services.

Hiring white label services is now a trend as not only it helps you reduce the contractors’ fee. It also eliminates the hassle of reporting and ensuring the delivery of quality services. DashClicks’ white label services are known for excellence and result-oriented services and hence customer satisfaction and business growth. Call us today at +1 (866) 600-3369 to learn more about the various packages and discounts.