The Secret to Pricing Your SMMA Services Correctly

ladies and gentlemen welcome back to another video in today's video we're gonna be talking about something that is rather unglamorous but nonetheless needs to be discussed that is how to price your social media marketing services so let's get into it now unsurprisingly this is an extremely complicated topic so i'm going to try and break down this video into three separate elements now before we continue i thought i'd let you know that if you go to the description of this video you're gonna actually find timestamps for all the relevant parts of the video so you know

like if you run for example uh e-commerce agency you can just skip to that part uh but to be honest like i recommend you watch the whole thing just to get as much of an understanding as possible and apart from that in the description i'm also going to go ahead and put degree and see glossary in the description so like if there's a term that i use that you don't understand it just head there and you'll find a full definition but no less let's get into today's teaching now first things first we're going to cover

how to define your service then how to price convenient based services and that'll make sense in a second and then lastly how to price results based services now previously you might have heard me talking about niches now i want to stress at this point that defining your services isn't the same thing as choosing which service you want to offer or who you want to offer it to it's about putting your services into one of two categories to do this you just have to ask yourself a simple question does my service save my client time or

make them money and when i say make them money technically as a social media marketing provider if you're helping them with instagram stories or you're doing content creation or you're doing social media growth and distribution you're still making them money but there's no discernible roi and there's a very there's just a bit of a disconnect in trying to prove that roi to the client so technically whatever you're doing for your client you're going to be making the money but when i say does it make them money and can you kind of track how it's making

them money that's really the biggest difference answering this question will put your service into one of two categories convenience space or results based now some of you guys may know that in you know a previous life of my uh my agency ig media i actually offered content creation and social media management to clients you know when i first started and really for my first 18 months like i was a creative agency and this was a convenience based offer it's great for me because i could deliver myself without having much expertise but because the service didn't

explicitly make the client money it was extremely difficult to justify the cost of my retainer and i mean you know in all fairness some of my clients i was charging 2 500 pounds a month to which comes out to like 3 200 a month um so good money it's just you know the longevity of those clients you know very few of those clients stayed more than four or five months and throughout the relationship together it was always a question of so this is amazing you know our social platforms are growing our content is incredible all

this stuff but what's the roi and this is something that you know this is really this is really the biggest struggle i was facing and it felt like you know really having a pair of golden handcuffs because i was still making 15 20 000 a month in my agency at the age of 17 but it came with its frustration fast forward to 2020 the past two years i've been exclusively offering paid traffic services to my clients and this is a results-based service so at the end of every month i can directly link the work we've

done as an agency to the revenue of the client especially because we work with e-commerce and info product businesses it's a total black and white we've spent this much and we've been able to bring you back this much in terms of website conversion value now one thing i do want to say is one service is not better than the other i think if i knew what i knew now i could have scaled my creative agency very easily to 50 grand a month 100 grand a month and in fact i have students who have creative agencies

who are doing around that six figure a month territory all it means is you just have to price your services differently depending on what you offer and also the framing and the expectations have to be a little different let's deal with convenience-based offers first now remember these include content creation social media management now before we continue i'm going to take a moment to explain that generally speaking convenience-based services struggle to demand higher retainers unless you're working with a brand that has thousands and tens of thousands and hundreds of thousands to spend on super top of

the funnel marketing and you know those sort of brand awareness campaigns you're only going to be able to charge anywhere from 500 to 3 000 a month that's kind of the territory that i've seen for a convenience based offer and this is why when you're working out how much to charge it's more important to work out what first of all you need to charge rather than what the client can afford and i'll explain what i mean by that in just a second you see pricing a convenience-based offer is very much striking a balance between two

things what the client can afford and what you can afford or what you're aiming to make you see each side is multi-faceted so you know let's take a look at this illustration to really show what i mean by this let's say you're offering social media management there are four variables to take into account when deciding how to price your services it takes an element of reverse engineering to kind of get this process but let's say you know that you want to make four thousand dollars a month like that is your no star make four thousand

dollars a month and you're gonna have a social media marketing uh agency that basically does uh distribution social media management and some growth and you know that in terms of service delivery let's say you are going to college or you have a job so you only have around 20 hours a month spare that you can use for service delivery and you know that each client for social media management takes around five hours a month to service and these clients can afford in the territory of a thousand dollars a month you see you're in a good

position in fact you're in the perfect position because let's say hypothetically the client could only afford 250 a month then you'll know that you'll have to work four times as hard in order to make the same profit likewise if each client can afford two thousand dollars per month this can be reflected in the amount of clients you can sign to maintain the same work life balance now now the next question is what can the client afford now unfortunately the answer this question can really only come through two things research and experience and one honorary mention

is just market comparables as i said you know i was charging some of my clients at the age of 17 1200 a month 1500 months 2 500 a month 3 000 a month and i knew that there were other agencies charging that same amount for content creation distribution and growth but i didn't see too many agencies charging let's say for example 8 000 a month for those same services so it's one of those things where technically there's no discernible roi on what you're doing but the more that you can make itself evident to your client

as well as just mixing in some experience that you have as well as some market comparables that should give you a good direction and a good read on what to charge now let's talk about result space now results based services are the bread and butter of most large agencies because they allow you to charge much bigger retainers but they also require that you're able to justify these prices to clients yes potentially i could go to a large corporation used to spending 10 to 15 k1 agencies and charge my fee without justification but those type of

clients are incredibly rare the great thing about running a boutique agency is that you're able to command much higher fees and justify them once more you have to separate two different types of results-based services okay first thing is lead generation all right is your service lead generation base where you're only responsible for generating leads and not the end product sales or are your efforts directly linked to the revenue for example with info product e-commerce sas anything where the transaction is made online and it's trackable then you know really the responsibility lays with you now for

lead generation there's one golden rule when it comes to pricing your services and that's that you should be delivering at least twice the value you charge your clients so your retainer should be approximately half the lifetime value of the number of customers that you have brought to your client now it's important to note that a lead doesn't mean a customer so you also need to work out with your client the percentage of leads that convert into customers another thing you're going to need to do is figure out their gross margins now this is different from

their pure margin so so let's say for example you're working with a dentist and let's say for example you bring them in four new customers that month you need to figure out what the lifetime value of those customers are with your client and then minus any sort of gross margins but this is also different from the bottom line margins you see here's the thing as a dentist for example you're paying you're paying rent you're paying your employees you're paying insurance all this stuff when you bring one extra customer in their rent doesn't go up so

this is something where um you know you might be talking with your client and the client's like oh but my you know my margins are only eight percent when really if you bring them in a customer gross margins on that customer is 80 and the reason that it's 80 is because let's say they're paying um you know let's say they're paying for a teeth whitening and it's you know the entire package is like six hundred dollars that doesn't mean that it should be six hundred dollars uh you know minus ninety percent because their margins are

only ten percent that means that it's six hundred dollars minus what are the actual costs associated to that like as in like what are the supplies needed you know they may only be 40 50 how much are they paying the staff hourly and are there two members of staff there to in order to service that client and how many hours are they spending you know that might come out to only another 50 so rather than the client may say oh you know but my margins are only 10 yes that's your bottom line margins but what

i've brought you taking into consideration your gross margins you know they may be closer to like 70 80 so that's something to note as well you want to figure out the lifetime value of that customer minus any of the costs associated to delivering the product or the service to that customer and you want to make sure that your retainer is no more than double that so let's say you've gone ahead and figure out that entire calculation and you have the gross lifetime value of four customers that you bring in that month comes out to let's

say six thousand dollars you know you really don't want to be charging more than 3 000 in that instance and also the way that you figure out how many customers you're bringing in is you have to figure out how are you getting customers through the door and what percentage of people who you bring to the door with an offer or a discount or or something to get them to adore some sort of lead magnet to get through the door what percentage of those people are then actually becoming paying customers so this is actually a quick

recording of the sheet that agency incubator students get which illustrates how you work out the lifetime value of a customer i love showing this to clients as most of the time they don't actually even know what the lifetime value of their customers are this alone just shows them like look you know what you are talking about so yeah this is uh definitely awesome to go through and work with uh in terms of your client now ecommerce is often seen as the uh you know the holy grail for agency owners and to be honest i think

too many people are fixated on e-commerce and info product uh you know it's you know especially info product by far it is the hardest niche to actually get results for in service in terms of e-commerce uh once again it's takes four or five times the amount of skill little that a local real estate agent or dentist or gym it takes four or five times the amount of effort and when it comes to pricing um you know e-commerce and info product businesses there is a big issue and that's ironically there's no golden rule for e-commerce and

info product businesses you know i don't have too much time here today to go through my full outline and kind of give you an example and break down every single number in terms of how to price local businesses but that is very very easy and it's very very methodical and i give people the same framework that i used for 18 months when i was first getting started in servicing local businesses but you know people ask me how do you price your info product in e-commerce clients and i said there's no golden rule most of it

comes down to gut instinct you know i i've underpriced myself before i've overpriced myself before and you might be wondering how does one overprice themselves well you know i especially fell victim to this in 2019 where like my goal was to make every single client a whale client so if you guys that don't know at graduancy.com we have a tiered system and a whale client is basically a clan that pays 8 33 per month in service fee per month or at least that amount because that equates to 100 000 a year in service fee i

would have clients that i got instinct told me charge them like 5 600 pounds a month i would literally bump it up to 6 800 pounds a month which would just make it to 8 300 a month just so i could be like i bagged another whale and while that's cool and all uh you know after the three-month minimum from there clients would realize like yo this is pretty expensive i have two people in-house performance marketer-wise so so while i was making more per month uh the longevity of them a lot you know pretty much

the only reason clients left us is because we were getting them incredible results but they also were like yo uh this is quite expensive like i could probably just bring this in-house and that's was you know the times where we did lose clients in 2019 at my agency it was it was never because we didn't get good results it was always a matter of like okay we're just going to bring this in house because it's pretty expensive so so you know as i said pricing e-commerce and info product businesses you know especially even this year

i have been going most of my deals actually this year have been below 5000 pounds a month and last year that was very rare for me so this year most of my deals have been uh 2 500 pounds a month 3 500 pounds a month but rather than three month minimums six months minimums and more the money is being made from the percentage of return on ad spend that we bring to clients so yeah ladies and gentlemen there really is no golden rule i mean i mean yeah even the last deal i did it was

a six month minimum 2500 pounds a month and this basically this client is already spending over six figures a month on ads and returning around 2x so that means that like if i was charging you know our standard 10 return on ad spend for an e-commerce client i would already be taking 10 grand a month in billables so i knew the client would never say yes to that so with that client i actually went anything that we make over 2x so that means that so let's say for example the barometer is set at 2x if

we make a 2.5 x spend 100 grand and make them 250 grand the the standard and the expectation is set as 2x so that'll be 200 grand we brought him in 250 grand that spread is 50 grand and i actually take a 15 return on ad spend on that spread so that means in that instance i would be taking our 2.5 k base fee plus a seven and a half k performance fee and and we're 100 confident that we can hit that with that clan so that'll be around 10 000 pounds which is 13 000

in in terms of our billables for that month so once again when i say that there's really no golden rule like i've you have to be quick on your feet when it comes to e-commerce and info product businesses and you have to use gut instinct you have to use a bit of logic and and as i said one of the main things that i see a lot of agency owners do uh once they get past the beginning bit which is that underpricing themselves is they overprice themselves and as i said that's an actual thing like

the best thing you can do is longevity and the best thing you can do is get your agency to the point where your uh your retention rate with clients is around 12 months a year and you know that's really where you've got a super healthy agency with super super predictable cash flows so as i said ladies and gents this is just some stuff that uh you have to take into consideration you know profit margins what's your agency experience um you know extra work involved uh roads and uh you know longevity as i've been talking about

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