What Should My Agencies Margins Be?
In our experience, agencies tend to weigh on either the analytical or creative spectrum. While both agencies want to discuss how they can bring utmost value to clients so they can grow a successful business-a question must be asked: What can you do to capitalize on your agency’s growth today? We understand you can charge more by conducting better work, but how do you decipher your price point today vs three months vs one year into the future?
In other words, how do you measure your agency’s value and performance and price according to your white-label partners fee’s + your fees?
First, let’s determine the costs you save when you partner with a Clickx (or any other white-label provider). The obvious benefits is that you will save time (which equates to more money), you’ll save yourself some worry, and you won’t have to worry about unpredictable results. For these reasons, you can imagine how they will all end up saving you dollars in the long run.
Clickx is a premium priced white-label digital marketing business, meaning we don’t compete on price because of our team’s expertise and the results we get for our partners’ clients. It’s for this reason our partners are able to charge clients at a higher price point and still retain more money in comparison to partnering with a cheaper white-label provider.
In addition, what we find is that partners’ gross margins increase when they partner with Clickx because of several factors. Dealing with in-house team members, partners margins were more unpredictable due to:
- Staff Changes. Employees often switch roles or performance swains causing agency owners to have to implement extra training which costs them time and money.
- Giving Bonuses. Great performance must be rewarded if you want employees to stick around. Agency owners sometimes have to forfeit their agency’s growth to pay employees.
- Hiring New Staff. Whether 1099 or full-time employees staffing can be unpredictable – especially in the current digital era. When partners decide to hire in-house they have to account for uncertainty.
What is a Normal Margin Range in digital marketing and What should I Charge as a Clickx Partner?
Most agencies are happy with 30% margins due to the numerous costs that go into implementing each campaign and onboarding each client.
At Clickx we suggest our partners charge at least double or 50% of our white-label fee. Luckily, we never change our prices so you partners don’t have to worry about losing any money with long-term clients on retainers.
Tips on How to Increase Your Margin
Start Small: Don’t worry about making bank right away, figure out a healthy margin at first. As a new agency your goal is to find a great fit (both in the solutions and niche you cater to) and solve a real problem. Many agencies start by charging 12-30% of their margins.
As a partner of Clickx, we’ll help you figure out who you are going to pitch to and how to charge based on the niche and size of the company.
Productize Your Agency: Let’s use a restaurant example to explain how you should think of charging clients. Instead of an hourly rate, think of each service like a burger. You already have the cost of a bun, lettuce, burger patty, and condiments. Therefore, you can consistently deliver your service at the same price every time, allowing you to scale.
In addition, you don’t have a lot of variables, so you can offer ‘add-ons’ that your client can purchase.
Value-Based Pricing: Again, don’t charge by the hour because you could be seriously cutting yourself short. Instead, do a little math and analysis to consider what the client will receive if your delivery adds value.
For example, you’ve delivered a landing page that sells clients $999 coaching services. Although writing this may have taken you a few days, all it takes is the client to sell five of these packages from the landing page and you’ve already delivered more value than you’ve charged.
White-label Provider: Need an extremely low overhead solution? Want consistency if your agency’s deliverables to clients aren’t confused by the variability? In addition, you want your agency’s marketing so that you can optimize each channel and make the most of your revenue.
These four principles are the top tactics successful agencies know and use to scale.
Healthier Margins Come in Time
Always consider the type of agency you want to build before throwing out prices to clients. Be tactful and make sure there’s clear logic behind your pricing. Clients are smart and want to know they are getting a good bang for their buck.
Premium priced agencies are able to charge that way because of the experience and results they’ve obtained. In addition, consider the niche you’ve picked when determining your pricing and margins. Understand your clients budget and gather the necessary industry information before deciding on your pricing.
Check out more videos on our Youtube channel. Let us know what you’ve found useful and other tactics to close clients and finally kick your agency into high-gear!
Ready to See How Clickx Can Help Your Agency?
Reach out to our team where we’ll get on a discovery call to assess your agency’s needs and see if we can be the partner that can help you reach your goals.
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