The hourly agency pricing model is a simple and frequently used pricing strategy among agencies, especially those just starting out. As the name suggests, this model charges clients based on the number of hours the agency dedicates to a project.
Essentially, agencies set an hourly rate and bill clients for each hour worked.
For example, if an agency’s hourly rate is $150 and they work for 10 hours on a project, the client would be billed $1,500 under this pricing model.
This model offers clarity and predictability, allowing clients to plan their spending in advance. It’s also simple enough for clients to understand, making it easier to sell, especially to agencies just starting out.
However, it is important to note that while the hourly pricing model is easy to implement, it does not take into account the value provided to the client – only the time spent. This can sometimes lead to an agency’s services being undervalued, especially if they are capable of delivering high-quality results efficiently.
That said, many agencies find this model to be a good starting point before moving to a value-based model as they grow and expand.
To avoid “trading time for money,”
Agencies may use a combination of hourly pricing models and other pricing models.
One agency that uses this tactic is Switch Jam Digital , an SEO and lead generation agency in the UK.
Ben Hilton, owner of Switch Digital Hours, says they classify each service as a “Task” and have a fixed price for each. But then offer upsells based on an hourly pricing model.“For example, Technical Audits, Keyword Research, Core Web Vitals will all have a fixed price. Any necessary remedial work will then be paid per hour at a fixed rate.”
Jordan Brunelle notes that at his agency, Brunelle Digital , a Nashville-based PPC agency, they also use an hourly model, but with a built-in retainer.We start with a monthly hour minimum. This fluctuates based on the client and their needs. We will bill for that time no matter what. It serves as our PPC management fee (or our retainer). If a client exceeds that 10 hours, we bill them by the hour. This is simple and clear for the client to understand. It allows us to use a retainer model while still protecting ourselves if a client needs a lot of extra time.
Another interesting tactic is to use an hourly phone number database pricing model as the basis for creating monthly subscriptions or “bundles.” RevForm is a SaaS marketing agency that uses this tactic. Here’s what Sam Ancliff, managing director at RevForm, had to say about their pricing model:“We use a subscription-based pricing model, which is essentially based on billable hours. So for our core service offerings we charge £2k/£5k/£16k per month depending on the level of service provided. Although not advertised this way, we base this on the same packages that cost us 10-15, 25-30 and 80-100 hours per month respectively.”
Pros and Cons of the Hourly Based Agency Pricing Model
| Excess | Lack |
| This model is easy to understand and implement. You simply calculate the number of hours spent on a project and multiply it by your hourly rate. | Earning potential is limited by the number of hours your team can bill. |
| Able to adapt to changes in project scope. | Efficiency is not rewarded; in fact, completing tasks faster can mean less income. |
| You get paid for all the work you do. Whether a task takes longer due to unexpected complexity or a client requesting revisions, you are compensated for every hour spent. | High-quality work completed quickly may not be rewarded appropriately, while slower work with less impact may be overpriced. |
| Offering transparency to clients who can see exactly what they are paying for. | The total cost can fluctuate depending on how long the tasks take. This uncertainty can make budgeting difficult for clients. |
Project Based Agent Pricing Model
The project-based pricing model, also known as fixed price, is a strategy where agencies charge clients a predetermined fixed fee for a specific project.
This model is based on the type of project and the results delivered, rather than the amount of time it takes to complete. It is a popular choice among agencies and freelancers because it offers clarity and predictability for both service providers and clients.
For example, imagine you run a web development agency. With a project-based pricing model, you might charge a flat rate of $3,500 for a website design package.
This price includes all tasks involved in the project – from initial consultation and planning, through design and development, to testing and launch. Whether your team takes 30 hours or 60 hours to complete the project, the client pays the same price.
This approach rewards efficiency and innovation, because the faster and more effectively your team can complete projects, the higher your effective hourly rate becomes.
Click Intelligence is a link building and SEO agency that uses a project-based agency pricing model.We gather all the services required for the project and set our profit margin. Occasionally, projects exceed their completion time and the client always understands. However, this pricing model is the most reliable, and we have a 99% success rate following it so far.
– Simon Brisk, Co-founder
We should mention that this pricing model requires careful mapping and calculations at the outset to ensure profitability.
Pros and Cons of the Project-Based Agency Pricing Model
| Excess | Lack |
| Clients know exactly what they are paying for up front. | Estimating project costs can be tricky. |
| Makes budgeting easier and eliminates worries about increased costs due to extended working hours. | If you underestimate the amount of work required, you may end up working more hours without extra pay. |
| This model charges for the value of journalism crisis and transformation the final product or service, not the time it takes to deliver it. | If the scope of the project changes significantly, it can be difficult to adjust the price without renegotiating the contract. |
| If your team completes a project faster than anticipated, your effective hourly rate increases. This encourages efficiency and innovation. | With fixed prices, there is more pressure to meet deadlines. Delays can reduce your profit margins. |
Performance Based Agent Pricing Model
The performance-based agency pricing asia email list model is a results-driven approach where agency compensation is directly tied to success metrics or Key Performance Indicators (KPIs) agreed upon with the client.
In other words, this model is all about “ pay for performance ”.