How Should Agencies Approach Pricing?

Wed 19 Jan 2022 11:00 am UK Time
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• Whether it’s a tricky client expecting too much for too little, or you’re struggling to get anyone on a retainer, pricing can be tricky.
• But Rob Sandbach, managing director of Indiespring, thinks he might have figured things out.•
• Join us as Rob takes us through the importance of transparent pricing, and how pivoting away from the traditional payment structure can keep you in the green for months ahead.

“We only bring one or two clients a year, because we tend to hang onto most of them – a lot of that has to do with our pricing model.”

Whether it’s a tricky client expecting too much for too little, or you’re struggling to get anyone on a retainer, pricing can be a right pain.

But Rob Sandbach, managing director of Indiespring, thinks he might have figured things out – potential clients can get a rough estimate of how much a job is going to cost directly via their website.

“There’s a massive misconception of how much effort it takes to do what we do,” says Rob. “Some people don’t appreciate that when we’re building an app, it’s a bespoke piece of software and there aren’t as many tools around to help give us a leg up.”

Their cost calculator is largely there to manage expectations. But the real nitty-gritty stuff comes from the agency’s new pricing model – they swap out big upfront payments for a more long-term retainer-based partnership.

By offering a lower sum up front with more time to pay, clients are more likely to sign up for a retainer and keep bills paid for months on end; a three-month job worth £75k suddenly becomes £10k a month over a year.

“Once the client is used to us being around and supporting them, paired with the fact that they don’t have the in-house resource to do it on their own, it’s very difficult for them to walk away,” says Rob.

Indiespring introduced its new model just 18 months ago, and the results have already been monumental:

  • There’s increased income stability and likelihood of high retainers.
  • Revenue is forecastable – they can look at the next year rather than a couple of months at a time.
  • They aren’t having to constantly focus on new biz and sales to keep the business afloat.
  • There’s more flexibility in their delivery and less pressure on their team.

The new model isn’t without its challenges though.

“If you’re incurring large costs upfront to deliver, it can be really difficult,” says Rob. “It’s quite easy for us to give away time, but suppose you needed to spend a load of money to get the ball rolling, that means you’re going to be cashing negative in the first few months.”

“You can also end up over servicing the product in the long run,” he adds. “Rather than it starting and ending on a fixed date, you find that you’re still constantly working on it week after week, month after month. So actually, you’ve given back all of that extra time that you built up.” Join us as Rob takes us through the importance of transparent pricing, and how a switch up in your payment structure can keep you in the green for months ahead.