Question: How much should we charge a client for digital marketing?
This is one of the most important learnings for us. One of first customers was a Hindu Priest, he paid us Rs 5000 ($100) for a website, we worked a lot, we created a very cool website for him. He called us few times to his office. He paid Rs 500 in advance. After getting everything done, he thanked us and asked us to wait, he will tell us when to make it live. We waited for months, we kept remind him but he won't make it live. I don't think it is live yet. We did not make any money (we lost more in terms of money and time). Next client was a Pizza company for US, they were ready to pay over Rs 1,00,000 (through an agent, agent will charge 3 to 4 times of that to the client), client got it done and made it live. two clients, two different clients, taught us big lesson about pricing:
- Pricing can be based on costing: Its costs X to you and you charge X+yX to the client (Generally the profit ratio is in the ratio of 35%+)
- Pricing can be based on competition: The client says, I am getting offers for Rs X, You also match the price to win the customer. The digital marketing is too unorganized, there are companies that will charge $5 per hour to $200 per hour. Some 5 to 6 years back, the market rates for outsourcing was $10 to $15, even today it stands at the same level, reason competition. Earlier the competition was low, people could charge more and everyone else was charging more. Now there are companies working at cost to cost (to survive).
- Pricing based on value: This is where the client also earns better and you also earn better. As a company we are trying to shift here. You don't pay us based on what it costs us, you see what value we can add for you. We charge, we take risk along with us, we get rewarded when you get rewards.
If you look at most of the top consultants, they work with large companies and earn huge. It is not very difficult to create value for GREAT Companies through digital marketing. At Techshu, we are committed to help Small & Medium Sized businesses (as 98% of the total businesses are in this bracket and digital marketing is their best marketing weapon), we work with large brands, local businesses and agencies. We have different teams for it to excel in each industry.
Shift/Focus to Value based Pricing for WIN-WIN
Charging based on value is where it is WIN-WIN for all. Also you need to make sure that the business is ready for marketing.