Four Factors to Help You Charge Premium Prices for Your Services
Author: Ines Lotfi December 8 | Blog
A true gun at agency processes and setting up pipelines that land large accounts, a kind mastermind with a passion for helping agency owners.
Having run his own multi-million dollar digital agency for 12 years (and having sold it for a hefty price), Jason went on to build a business that shows agency owners the exact systems they need in place in order to work with their ideal clients and charge what they’re worth.
There are four factors Jason believes will help any agency in helping them to charge premium prices for their services.
1. Motivating a remote team…
“If you hire the right person and you have to motivate them, they’re not the right person.”
The key to being a good leader in your business is to inspire your team on what your overall vision is and where the business is going.
According to Jason, there’s a tell-tale sign on if you have the right team: if the person you hired came to you tomorrow and resigned, would you be happy or sad?
That in itself should answer your question.
2. Finding your role within your business…
You’ll find the part you play in your business if you treat it like a buffet. Try everything. See what you don’t like, what you love, and keep doing it.
Ask yourself one question: what do you want to do every day and what don’t you want to do?
And this takes good self-awareness. What are your strengths? What are your weaknesses? Don’t do what you’re weak at and hire for it – just execute your strengths.
For example, people who like to focus on the strategy, the visionaries, are rarely the best managers. And that’s completely fine, as long as they find someone who’s really good at operations.
Because that’s what a successful business is: covering all the angles and finding someone who is strong at each one of them.
And as for the dilemma of hiring in-house staff or working with contractors, for Jason, it’s simple.
“If I were to structure it, everyone who would be on the strategy or leadership side would be in-house. Everyone on the execution would be contractors. That way it’s flexible.”
Pick a vertical within the industry and then a horizontal with the technology and then literally your only competition is cat videos and procrastination. You eliminate everybody.
3. Finding your niche and eliminating competition…
Interestingly, Jason’s agency pinned down a horizontal niche rather than an industry-focused one. They provided services based on technology to start off with.
Creating some of the first CMS, eCommerce and email marketing systems, the vertical niches – higher education and automotive to name a few – didn’t come in until later.
“But you need to think, I had 100 people,” Jason says.
“If you have less than 10 people, and you have more than 2 niches, you’re just kind of doing it half-ass.
The most ideal situation is: pick a vertical within the industry and then a horizontal with the technology and then literally your only competition is cat videos and procrastination. You eliminate everybody.”
Although his agency got to the $2 million mark without picking a niche, Jason highly recommends niching in time.
“You won’t get to the 8-figure mark without picking a niche, because you’ll hit a cap and look like everybody else.
That’s why I always tell everyone to pick a niche because you can start eliminating people. There’s so much competition out there, how can you position yourself to be THE choice rather than A choice?”
And speaking of recommendations, Jason also suggests you pick a niche you’re not only good at, but passionate about too.
“Think about it this way: what would you do for free? And then the other part is: if you were going to be paid on performance only – what industry, what type of person would you work for that you could get amazing results?
If you can match those two, you can’t lose.”
4. Getting your price right…
When it comes to pricing, looking at time rather than money is Jason’s modus operandi.
“You have to figure out how much time you’re going to put into this. You should be tracking time. Before I started time tracking, I was losing money with 60% of our projects. I was just lucky the other 40% was extremely profitable.”
So Jason came up with a formula to decide on pricing.
Create a track record of how much time a project would take, and then increase it by 25% for profitability, and another 25% for unknowns.
“So if I thought a project would take 100 hours, I would immediately charge for 150 hours. At the lowest.
The other thing is the expectation for the client.
If I sold you a Ferrari for $100, what are you thinking? Is it stolen? Is it a matchbox car? What’s wrong with it? No one sells a Ferrari for $100.
And I’ve lost a lot of deals because I was charging too low and they would think: what’s wrong with you?”
Essentially, you need to know the value that you provide to your clients.
“If you don’t know your value, and most agencies don’t because they don’t ask the right questions, then I can promise you your clients don’t. And you’re vulnerable to losing them any minute.”
In other words: the price is irrelevant where value is perceived.
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