Warning: Comparing flat rate vs value pricing nearly killed my agency profits

I ran my marketing agency on flat rate pricing for 2 years and barely broke even each month. Last quarter I finally switched to value based pricing after a mentor in Austin told me I was leaving $3,000 a month on the table. The difference was night and day because value pricing forced me to actually measure what my work was worth to clients instead of just tracking hours. For one client I was charging $1,500 flat for SEO work that was bringing them $12,000 in new sales monthly. When I switched them to a value package at $3,800 they signed without blinking because the ROI was obvious. Now I have more time to focus on results since I'm not nickel and diming every task. Has anyone else made the jump to value pricing and seen weird pushback from certain types of clients?

2 comments

2 Comments

webb.xena28d ago

Made the switch about 6 months ago and it was scary at first but totally worth it. Found that clients who were used to paying by the hour had the biggest issues because they wanted to know exactly what they were getting for each dollar. But once I laid out a simple case showing what they were making from my work versus what they were paying, most of them came around pretty quick. The ones who didn't were usually the ones who weren't making enough from my services in the first place, so it was probably a good thing they left.

ivancoleman28d ago

Heard a business consultant talking about this once. Said pricing on value filters out the tire kickers who waste your time. @webb.xena nailed it, the ones who leave are usually the ones who were costing you money anyway.