When you start up your digital marketing agency, one of the first steps is to decide what your agency business model will be. Often when you’re just starting out you may not be sure how you are going to set up your marketing agency fee structure.
The Project For A Fee Agency Business Model
If your agency focuses on project work the fee for a project model is pretty straightforward. You calculate the number of hours of work you think the project will take, multiply by your hourly rate, and add a percentage for agency profit.
This model has been around for decades and is considered one of the traditional marketing agency business models. The problem is that today there is a lot of pressure from your customers to cut costs and that always reduces your profit margin.
The Declining Balance Agency Business Model
Another marketing agency fee structure that is commonly used is one where you budget a certain number of hours of work per month based on a retainer from a client. You execute the work and deduct it from the client’s allotted work hours balance.
Problems can arise when various factors affect the timeline of the project work and you may find yourself needing to go back to the client to ask for more budget. If the client has a budget issue, you could see the carpet yanked out from under you when you least expect it. Plus clients who like this model tend to be larger organizations, so when you lose that budget it can really hurt your bottom line.
The One Move That Can Transform Your Agency Business Model
The one move that can transform your agency business model is to start offering services that allow you to generate monthly recurring revenue. Search engine optimization and pay-per-click advertising are great services for monthly recurring revenue.
Adding services that generate monthly recurring revenue can be the lifeblood of a marketing agency business model. When you can sell monthly recurring revenue services, you take away the pressure of having to constantly sell project after project.
Growing a marketing agency without monthly recurring revenue services can be like pushing a boulder uphill.
When you are offering search engine optimization or pay-per-click advertising services, you should be able to generate $300,000 per year per employee. Even with today’s higher hiring costs, that’s nothing to sneeze at.
Plus, these services are super easy to sell. These days every business owner knows how powerful search engine optimization and pay-per-click advertising can be to their business. These services, when executed properly, can drive sales-ready leads for your clients’ businesses. When you’re able to generate ongoing business for a client, they are going to stay with your agency for a much longer-term.
If you don’t have expertise in SEO or PPC, Peak SEO Training can help. We build SEO & PPC departments for agencies. We help you find the right people, we train them with our super detailed video training system, do live 1-2-1 weekly coaching sessions, and you get all of our systems, documents, and detailed task lists. We even show you how to sell these services. Everything you need is included.
If you’d like to get started offering SEO and PPC services at your agency, reach out to us at 973-770-4668 x101 or you can click here to schedule a discovery call to see if there is a good fit for your agency.