Part 2 (1/2)

Value-Based Pricing

I took the approach that if you can define the scope, which is possible with nearly every ency service, then you can standardize the service and assign a set price Although so plans, are ency services can be standardized by clearly defining the scope of what is to be done

Sample Standardized Service

Standardized services, such as the following case-study example, commonly include description, features, benefits, and set price: Provide prospects and customers with powerful examples of how your products or services deliver value and results Case studies are ideal website content for your visitors,and sales tools, and can be used as editorial submissions

What Makes a Good Case Study?

Satisfied, recent custoh-profile application (coe and solution

Impressive, quantifiable results

Innovative or customized solution

Hi-res photos available

Custo and able to be interviewed

Lial concerns with trade secrets/proprietary inforhts key product/service benefits (speed, efficiency, productivity, profitability)

What's Included?

Following a standard outline of challenge, solution, and results, PR 20/20's professionalcopywriters will craft a case study for publishi+ng on your corporate website, blog, or media room

Approximately 700 words

Optimized with priority keywords and written with buyer personas' key needs in n and strategic planning if you plan to use case studies in print or PDF fore turnaround: 1520 business days

Price = 1,000

The guiding principle was that set prices had to be value based,they were to be determined based on perceived and actual value rather than the nu takes to complete So if a trifold brochure was priced at 2,500, then it did not matter if it took 15 or 35 hours to produce, the client would pay 2,500 The burden was on the agency to build systeht talent in place, to profitably deliver at the set price

In the traditional billable-hour model, the basic formula to determine cost is hourly rate billable hours It is simple, but as we have seen it is also inefficient and favors the agency's needs over the client's On the other hand, the value-based pricing model takes seven primary variables into account: 1 Estiet (HRT)

3 Costs

4 Perceived value

5 Builder vs driver

6 Loss leader

7 Service level

In most cases, you will be able to deter estimated hours HRT, but you want to take the other variables into account before finalizing the price

Estimated Hours

At peak efficiency, how ency to complete a project? Keep in mind peak efficiency is the key here, and one of the main differences from the traditional model For services to be value-based, clients should not pay for agency inefficiencies They should be charged for the esti the service The actual time invested will vary project to project, but if your estimates are accurate, and your teae out over time

The best way to deter historical ti post copywriting Pull reports froency has coe hours needed If you do not have timesheets to reference, analyze the scope of the service, and forecast tiuess

I can tell you fro with thisYou will get soet burned a ti and reporting systems in place, you can quickly adjust and move on

It is important to note that the value-based model does not eli actually becomes more essential in order to monitor efficiency and productivity, evaluate employee perfor We will talksysteet (HRT)

How enerate per hour of client work to achieve profit goals? For solo practitioners, the HRT will probably be siencies with multiple employees, you will need to consider additional variables such as expenses, growth goals, payroll, and target profit ins

In essence, the HRT is similar to a flat rate in the traditional billable-hour model, but now it is only one of seven factors taken into consideration when deter service prices My best advice is to talk with your accountant or financial advisors to deter is a very si the industry standard benchency has five full-ti client-service hour capacities For example, the CEO may be forecasted for 50 hours per eted for 140 hours per oal is 120,000, which translates into 600,000

So, if the agency delivers 5,880 client-service hours, it would need to earn 102 per hour in order to achieve its annual revenue goal of 600,000 (600,000/5,880 = 102 per hour)

Again, this is not the only option to calculate HRT, but it provides a basic structure to deter point

Costs

Are there any costs associated with the production and delivery that will be built into the price? This raphic design, video production and editing, or licensing fees I suggest considering these costs when deter your HRT

For exaency eight hours to write a 1,000-word sales sheet, and your HRT is 105 Your price would be 840, but that does not take graphic design fees into account So you contact your preferred designer and negotiate a fixed cost of 500 on design Now you have a price of 1,340, which you can leave as is, or round up to 1,400 to account for ive yourself a little flexibility on your tined sales sheet worth 1,400? That question leads us to our next factor, perceived value

Perceived Value

What is the fairto pay for the service? In many cases, this is theon your own experience and researching what other agencies are charging, you can often settle on pricing that fitsthe example sales sheet, youclients 1,800 to 2,200 for the sa but rave reviews So put the price at 2,000 and move on to the next one You have now created a value-based price that ives you the chance to earnsyste coet, and adjust the set price as needed