Marketing Agency Pricing Models

From time to time, we're asked if we can do 'pay per lead' or 'pay per signed up client' instead of either a day rate or by monthly activity. Naturally we want to maximise the amount of business coming in, and as that is directly linked to the success we make for our clients, on the face of it, why wouldn't we? Especially as we're so confident as we have proven results!

Interestingly, whilst utilising the outstanding services of Semrush "S E M Rush" to better understand a client's website traffic we stumbled across an overview that we thought perfectly encapsulated the choices we all have when looking at taking other people's services and how to pay. We couldn't present it better so thought it prudent to share.

Image owner: SEMRush. https://www.semrush.com/blog/digital-marketing-agency-pricing/

Although the cost of a 'pay per lead' (and the definition of a lead opens up a can of worms itself) appears to make the most sense to anyone using a service, due to reduced financial risk, it's the opposite for the provider. Which means the cost needs to take this into account and it's not uncommon people pay £500+ for appointments that were simply permission to quote alongside several others.

“There is so much trust letting someone be the voice of your business that thinking mid to long-term regarding business development outweighs a potentially reduced financial risk.”

We've had clients come to us after trying these options and the typical story is it starts off well but fizzles out. The general consensus is if you an Agency that works this way has one client on pay per lead, they'd give it their all. If they had 10+ clients and three pay more than the others and are easier to obtain, and naturally your sales staff are commission based, who is going to get the attention, and who is going to be pushed back?

In addition, if an Agency is working with multiple businesses in the same industry, the same lead is potentially being sent to all of them, and being charged each time. Very lucrative for the Agency but the dilutes the lead to more of a 'heads up'.

To be fair to the Pay per Lead providers though, the reason we haven't spoken to anyone particularly happy with them is they don't need to speak to us! However there is so much trust letting someone be the voice of your business that thinking mid to long-term regarding business development outweighs a potentially reduced financial risk.

There is certainly a place for the modal, and personally I'd say it's relatively low margin quick turnarounds if the agreed rate makes sense. Where the pay per day or per campaign (or in our case per month) shines is the whole purpose is to keep you as a client, for years. And the only way to do that is deliver. So after a three month trial period, going onto a rolling contract option totally makes sense as you retain control opposed to a lengthy contract and the only reason you'd stay is because the results speak for themselves.

To surmise, it's easy to justify any model, but ultimately I believe it comes down to one of two mindsets: You're either looking to save money, or you're looking to grow your business.