Leads to Leverage:

Yankee Candle is using new techniques to engage with consumers during the on-going pandemic. They’ve eliminated in-store sampling while people are spending more time than ever burning candles at home, and now offer a quiz that allows you to narrow down your top pick for scent – eventually leading up towards purchase! Hint: they may want support from promotional activity as well.

Bumble and bumble, LLC is a leading hair-care products company and salon. In addition to its cosmetic products the company also operates Bumble and bumble University, which offers classes for stylists and salon owners. Bumble and bumble, LLC is headquartered in New York, NY.  They currently work with Reprise Digital for their digital and social work.  They have also shown a high interest in CRM recently.

 

Expansion Plans:

Potbelly – New Franchise Locations + Quick Growth + Digital Needs + 12-Month-Old CDO = Opportunity

https://www.qsrmagazine.com/sponsored/potbelly-poised-grow-2000-locations

Brand Launch:

Mush – The Ready-to-Eat Overnight Oats Brand – Launches Nationwide at Kroger

https://www.perishablenews.com/dairy/mush-the-ready-to-eat-overnight-oats-brand-launches-nationwide-at-kroger/

Trend to Watch:

As remote work rages on, establishing personal connections in a professional capacity is more key than ever. Seeing the field, corporate gifting platform &Open garnered $7.2m in VC funding last May.

NEW CMOs IN CHARGE:

1. 1-800-Flowers.com
   Jason John
   Chief Marketing Officer
2. See’s Candies
   Leslie Horenstein
   SVP & Chief Marketing Officer
3. Valley Bank
   Angela Ceccarelli
   EVP, Chief Marketing Officer

Pricing your agency’s services is one of the most essential things you’ll do as an agency executive. Your pricing determines not only your sustainability and profitability, but how much time you’ll invest in your clients’ projects, their satisfaction with your work, and your workflows. 

As you already know, a solid pricing strategy can mean the difference between a well-functioning agency and one where employee retention is an issue. As much as clients want to feel they’re getting a good value for their investment, your staff needs to feel like their time and effort is valued, too. 

Let’s remind ourselves of the three main types of agency pricing models: hourly, project-based, and value-based, the latter of which structure we’ve seen be most lucrative for agencies. Then we’ll review the pricing model steps to take, so your agency can easily map out how to adapt your pricing strategies if you’re not quite basing your work on its true value! 

3 Types of Agency Pricing Models

There are three basic types of agency pricing models: hourly, project-based, and value-based:

1. Hourly or Fixed Rate

When your agency charges by the hour for client work, you’re operating on an hourly rate pricing model. Sometimes called a blended rate, hourly rate pricing means multiplying hours worked by your established hourly price to come up with a total bill for the client. 

On the plus side, hourly rate billing is fairly straightforward. Some agencies offer a menu of rates based on the skill and/or seniority of who is completing the parts of a project. Others offer a standard rate that’s a “blend” of the rates of everyone on the account (hence the term “blended rate”). No matter how you slice and dice your rates, you give an estimate of the total hours it will take to complete the clients’ project multiplied by your rate(s) to let the client know how much they can expect to pay for your services. 

You can work out a pay-as-you-go arrangement, or you can require a certain amount of the estimate up front with the remainder due at completion. 

However, the hourly rate pricing model isn’t common anymore because of its pitfalls. When you charge by the hour, your agency (at least in theory) has an incentive to drag projects out. You might end up spending more time tracking your associates’ time than is efficient. Your clients might start to question the value of your work if it takes longer than expected, even if they make additional requests or your team discovers it really should take the work in another direction mid-project. 

Finally, charging by the hour makes estimating your cash flow and profitability more difficult because you don’t have an accurate revenue figure until the project actually ends. For all of these reasons, hourly rate pricing isn’t used by most agencies anymore.

2. Project-based 

Project-based pricing means charging clients a fixed amount for their desired project. (Some agencies call this model “fixed fee” pricing.) Your agency considers how long it will take to complete the requested work then calculates a price based on the hourly rates of the staff who will complete it plus your desired profit margin. Agencies ask for a certain percentage of the bill (usually 25 to 50%) at the start of the project and collect the rest upon completion. 

Clients seem to like this pricing model because they can know from the start how much they’ll pay. For example: $500 a month for public relations services. $300 per month for managing a Google Ads campaign. If they have an additional request or tweak to the project, as long as it’s within a reasonable distance of the original project scope the agency will sometimes fold it into the project without an up-charge. This is how retainers work: The client pays a flat fee for an agreed-upon menu of services that the agency completes as needed. 

But the project-based pricing model isn’t the greatest for agencies. You have to very accurately estimate your time and costs at the start. Otherwise, if your team realizes you have to do more work than anticipated to deliver quality work (“scope creep”), you have to either bill the client more or eat the costs yourself, depending on your relationship with that client (and how you want it to go!). 

Project-based pricing can also stifle unique ideas or experimental directions because your firm won’t want to pile more work on yourselves for the same revenue nor continually ask the client for more money to fund those ideas. 

3. Value-based 

The third agency pricing model we’ll discuss is a happy medium between hourly and project-based pricing. Value-based pricing means your agency prices your services based on how well you can produce the results your client wants – whether that’s a new brand image, product awareness, leads, or conversions. You and the client determine what the end goals of your advertising services are. Then you set a price based on your time and skills, but also based on your confidence in your ability to meet those goals.

It helps to have a proven record of results in the same arena! But assuming your agency has produced meaningful results that helped other clients achieve their goals, you can make the case that what the client is really purchasing is results. And when your agency is delivering results, you can charge a fee that is very profitable for your agency and that your client considers a valuable investment. 

It’s important to note that value-based pricing is not the same as performance-based pricing. You don’t get paid based on how well you actually achieve a client’s goal(s) or not. (You still get paid even if you happen to fall short!) You charge the client based on the perceived value that your services bring to the table. This value could be in the form of having a very seasoned industry veteran working on the project or your ability to offer a unique product or service related to your work, such as multinational services or proprietary research methods. 

If your agency doesn’t have a unique enough value proposition or a practiced way of introducing clients to this pricing model, your agency may need to gain more experience or level up your capabilities. But value-based pricing is the smartest way for agencies to position themselves in the marketplace for long-term sustainability. 

How to Develop a Value-Based Pricing Strategy

How do you get to the place where you can confidently offer a value-based pricing model? Consider these steps:

1. Know your target client base

What are their goals? Why do they work with agencies like yours? What do they want from those relationships? Just like you would for a campaign, research your audience and how they use the product (in this case, your agency is the product!). What’s their problem, and how much would they pay to solve it?

2. Know what your competitors are charging

The value of your agency’s services depend on the outcomes you supply, but potential clients are going to view your prices in comparison to others, too. You might be able to produce great results very cost-efficiently, but if that means your prices are significantly below your nearest competitor, clients will assume they’re not getting as much value from your agency, because why else would you charge such low rates? Conversely, if you charge a lot more than your peers, potential clients will view you as too expensive, even if your services do fall within their budget. So, look at what your competitors charge as well as what they offer for their fees. Know the current market rate for agencies like yours.

3. Know your agency’s unique value proposition

What makes working with you a better choice than working with peer agencies? You should examine not only the cost of inputs at your agency but the value those inputs create. What does your agency offer that’s unique in your space? Do you focus especially on relationships? Assign an amount that reflects the unique value a client will receive if they work with you.

4. Get a handle on your inefficient processes and pain points

You want to reduce scope creep as much as possible since value-based pricing isn’t time-based.

5. Determine your pricing focus

There are two basic ways you can prove your value. The first is to focus on the features your agency will offer: personalized attention, regular check-ins, or creative from a renowned staff member. You’re proving that the client is getting value from your capabilities. The second is a benefits-focused value strategy. This tack emphasizes what is different and unique about your agency and the results you’ll deliver as an advertising partner. This is a true value-based pricing strategy.

Conclusion: Charge What Your Services Are Worth 

Sometimes we need a simple reminder that setting a pricing strategy is important for the long-term sustainability of your agency. You want to set fair prices that meet your market’s competitiveness, but you also need to charge a rate that accurately represents your talent and your time. 

Consider the three pricing models above: hourly, project-based, and value-based. Each pricing model has their pros and cons, and your agency might be in a stage where one model makes much more sense than the others. It’s okay to change your pricing models (and move toward the recommended value-based model) as you gain experience, clout, or better processes. However you do it, get a handle on your pricing before clients dictate it and do not undervalue your services. You’ll have a happier, more effective workplace when you price your services right!

 

What’s Trending: Anti-anxiety gadgets like fidget spinners, coloring books, and Pop It pads hit the mainstream a while ago. Then came wearables like weighted blankets, robes, and even these calming mittens for social anxiety. 

Looks like next in line is a range of anxiety-reducing furniture. 

In 2020 there was a boom in anti-anxiety dog beds resulting in some pretty serious online searches each month:  

•         Dog calming bed: 22.2k searches/month
•         Calming bed for dogs: 6.6k searches/month
•         Anti-anxiety dog bed: 2.4k searches/month
•         Calming cat bed: 1.6k searches/month

Now companies like Mood Pod, Yogibo, Lovesac, Cordaroys are creating the same for humans. 

The company, which attracts ~200k monthly website visits, claims that their zero-gravity beanbag chair made with responsive high-density beads mimics the calming sensations of flotation therapy.  

The OTO Chair, created by Alexia Audrain specifically for people with autism, is designed to simulate a hug. 

The Opportunity: The market for therapy furniture is wide open and it is growing. 

In addition to beanbag chairs and support pillows, therapy furniture for the children’s market is on an upward trend. Office pods are being repurposed by some mental health care facilities to create “quiet pods” — a place for clients to relax before their therapy sessions. Pods are also being targeted at corporates looking to provide a calming space for their employees since mental wellbeing is increasingly on the minds of all employers. 

Next Steps: If you need a remedy for more new business in an upswing sector, you may want to analyze therapy furniture as an area to explore further.  Prospect smAARt, pitch with purpose, and most importantly, with passion.