It’s one of the most common questions about marketing agencies.
Maybe the most common.
“What does a marketing agency cost?”
If you’ve been looking at marketing agencies in search of an answer, you might be expecting an 8,000-word blog that leads you through a house of mirrors until you finally give up on the vague non-statements. But, although this question is more complicated than it looks at first, it does have a “right” answer.
It costs as little as about $3,000 to as much as about $8,000 per month to hire a marketing agency.
But that’s still a broad range, and a lot depends on you.
If you want to get the most out of your marketing agency investment – and probably save a lot of money at the same time – it’s helpful to understand how marketing agencies set their prices. These are “trade secrets” you’re not likely to read about elsewhere, since clients knowing about them means agencies need to be accountable.
If you want a peek behind the curtain, read on.
The first step in understanding marketing agency pricing is making sure you’re really comparing apples to apples. Many different firms say they’re “a marketing agency,” from multinational teams of hundreds to a single-person shop. Luckily, it’s not as hard to make an apt comparison when you look under the surface.
The First Piece of the Pricing Puzzle: Full-Service Marketing Agency vs. Boutique Marketing Agency
Agencies that specialize in one or two marketing techniques are known as boutique agencies. They might focus on things like social media, email marketing, or other specialties. No matter the details, they usually price their services at one extreme or the other. They can be very inexpensive or super-premium.
If you’re browsing a boutique agency that’s considered one of the best of the best in social media, for instance, you might end up paying three times as much as you would pay for a full-service digital marketing agency. Full-service marketing agencies deliver complete marketing strategies putting many different tactics together.
Naturally, most boutique agencies aren’t super-premium. But you need to understand precisely what they’re offering you in order to gauge whether their price makes sense in your situation. You might not be able to capture lasting value from even the best social media boutique if your website isn’t up to snuff.
The same is true of any other boutique agency. Because they are so engaged in one area, you need to be able to manage the results they send you. That definitely means ensuring you have a stable, secure, and compelling website before you even start your contract. For some companies, that trade-off doesn’t make sense.
The least expensive boutique agencies are those that are just starting out. While specializing means they have the potential to learn fast, it also puts you in the uncomfortable position of being a “learning experience” for a team that might still be hit and miss in some of what they offer. So, a lower price isn’t necessarily a good deal.
If you are starting from scratch, or you want to capture consistent, measurable results that move you toward your goals over a period of months, then you probably want a full-service marketing agency. Oddly enough, a full-service marketing agency can be much less expensive than a boutique agency.
That’s because a full-service agency has the opportunity to leverage economies of scale. All the overhead, such as training and software, is already built-in, and the right processes are in place behind the scenes to ensure a smooth pivot to whatever you need, without having to figure it all out from scratch or re-invent the wheel.
Pricing, Part 2: The Most Common Pricing Models for Marketing Agencies
In a complex service-based business like marketing, there’s a lot of leeway involved in deciding exactly how to set prices. Like many other businesses, the decision starts with an understanding of what kind of margin that agency needs to achieve to pay for its overhead, including the talent who make the whole thing work.
Over the years, this has led to the development of two main approaches to pricing:
1. Retainer-Based Pricing
With a retainer-based pricing structure, your business agrees to a monthly fee. All deliverables are measured against that fee, which might or might not be exhausted by the end of the month. In some cases, this can add clarity because you know exactly what you can expect. In others, it does exactly the opposite.
Imagine a boutique agency that only does content marketing. If they focus exclusively on blog posts, then it may make sense for them to use a retainer model. Clients know exactly what they’re getting: They can count up the total words for their blogs to date and see precisely where they stand until the rollover date.
Most of the time, though, the retainer model is a source of confusion.
Today’s full-service marketing agencies inherited the retainer-based model from old-fashioned advertising agencies, and the transition between the two isn’t always a smooth one. The retainer option usually leaves businesses like yours with a lot of unanswered questions. You’re expected to “trust the magic.”
That gets harder when you notice you’re getting much more one month and much less the next.
Here are just some of the ways that the retainer model can leave business owners scratching their heads:
- How many hours does something take?
- What can I expect to be accomplished every month?
- Why did it take three hours one month but ten hours the next month?
- Why is my rate per hour so high?
All in all, there are no answers to these questions. A marketing agency may try to soothe your concerns, but it can’t really provide you any insight into the process that “makes it all make sense.” Unfortunately, that means you might end up a victim of agency bloat: Paying for things you never use and subsidizing other clients.
2. Plan-Based Pricing
Sooner or later, most businesses get frustrated with retainer-based pricing. Retainer-based agencies that have been around for a while typically add a plan-based alternative, while many boutique agencies (including those freelance marketers who want to look fancy) start with a plan-based approach.
With plan-based pricing, you’re choosing from a small menu of predetermined options. In some ways, this can be superior. When your marketing agency is on the up and up, the different plans reflect sound ways to invest your marketing budget that have proven results, with each larger plan building on the previous ones.
Plan-based agencies don’t need to worry as much about overpromising or under-delivering. Both sides are more protected from unreasonable demands since everything is laid out in advance. But many businesses will reach for a plan that isn’t necessarily in the budget just so they can get out of the weeds of retainer pricing.
When that happens, companies like yours can still be paying for a bunch of stuff they don’t necessarily need or want. And while the results might be satisfactory at first – and should be visibly more consistent than retainer-based pricing from the word go – you are still vulnerable to the “man behind the curtain” effect.
Things are a little bit clearer. But they’re not optimized for your best interests.
Pricing, Part 3: How New York Ave Does It Differently to Deliver More Value
At New York Ave, we’ve defined a new approach.
We base our pricing on budget thresholds.
Together with you, we work to select a budget that:
- Stays attainable
- Gets you what you need
- Maximizes deliverables
Our custom pricing approach maximizes output, narrows the focus to the tasks that truly add the most value, and provides accountability on what you can expect. Combined with our focus on data drawn from your website and other digital platforms, the actual effect of your marketing will be clearer than ever before.
Even more importantly, it means you can participate in building a plan that works for you.
As our client, you’re the leading expert on your business. Everything starts with a conversation where we find out about you – what brought you here and where you want to go next. By giving clients a clear path to shape their own engagement down to the detail, it will reflect you just as much as your marketing does.
Based on hundreds of successes in dozens of industries, we’ve crunched the numbers for real answers to the big questions about agency pricing. What we’ve discovered is this: Hiring a marketing agency is the right move for most businesses compared to the $7,779 average monthly cost to recruit one marketing director.
A marketing director whose first move, of course, is to bring on more people.
When you choose the right marketing agency for you, you have the potential to save $30,000 or more in staff costs every year. That doesn’t even count the cost of licensing software, training team members on the latest marketing techniques, retaining them, and so much more it can make your head spin.
The right marketing agency means 5x the work at 10x the quality for half the cost.
But even the best price isn’t really the best price unless you get truly custom marketing – marketing by humans.
With New York Ave, Everything You Get Is Custom – That Makes the Difference
No matter their size or the industries they usually work with, many marketing agencies have fallen for the idea that they always know best. By pigeonholing customers into a pre-set plan, or getting them onto a retainer that never delivers consistent results, these agencies end up putting their own interests over yours.
That’s why, when comparing apples to apples, New York Ave will always be the better value.
Sure, there are boutique agencies out there that can do things with just social media or just email marketing you’re sure to marvel at – great, award-winning things. But most businesses don’t need just one technique.
When what you really need is a complete marketing strategy, it’s crucial to look for a full-service agency.
And when it’s time to compare full-service agencies, it’s vital that pricing make sense. If you feel like someone is trying to convince you that you “just wouldn’t get it,” you haven’t found the right agency for you. We strive to be an agency you can rely on and trust by demystifying the process from beginning to end.
If that sounds good, the next step is a chat. There’s no obligation and no commitment until you’re ready.
Contact New York Ave to find out more and decide whether we’re the right fit for you.