Flat Rate Pricing, Agency Saturation & Partner Problems #AskSwenk Episode 25
In this episode, I’ll answer:
- Which is better: flat rates or a sliding scale?
- Is the agency industry oversaturated?
- What do you do about a partner who wants out?
Which is better: flat rates or a sliding scale? (0:16)
Sophie asks: “Do you find it better to have standardized rates or a sliding scale? Which one is better for accommodating clients?”
Stay away from flat rates! Definitely do the sliding scale.
When I ran my agency, I had a meeting set up with a company I had never heard of. I walked into a gorgeous office space with a huge conference and a trail of executives marched in. I nailed the presentation and quoted them something like $10K or $20K for a website. I didn’t get the job – I returned to my office puzzled as to why.
After talking to my partner I learned that I had met with one of the largest companies in the world, Berkshire Hathaway. They were expecting a proposal for something more like $300K.
Moral of the story: Do your homework! Know who you’re going after, what their issue is and what impact it will have on their business. Base your sliding scale on the value of what you’re providing.
Is the agency industry oversaturated? (1:39)
Jake says: “I’m hearing the digital marketing business is overrun with kids out of high school claiming to run an agency. Clients have literally said that if they can’t get the cheapest price from one of them, they’ll turn to elance, odesk, or fiverr. How can I handle this type of response? Jason, do you think the industry is oversaturated?”
Not. At. All. Your competition is NOT high school kids or online solutions. You are an agency with a specialization and that industry is not oversaturated.
What IS oversaturated is the generic contractors who crank out Facebook ads, banners, websites, etc. and that’s it. They are a dime a dozen. They do not provide value and cannot impact the client’s issues. At an agency there’s more than one set of eyes, more than one set of skills….
If you’re meeting with someone who is only focused on price then show them the door. If you they are beating you up on price now, that will be their focus for your entire engagement.
“There’s no such thing as a bad agency client, only a bad prospect.” You don’t want to work with this type of price-driven client who is satisfied with unspecialized, cheap work.
What do you do about a partner who wants out? (3:38)
Shawn says: “I am a 50% owner of a digital agency. I would love to hear about your experience with a partner. How did you leverage opportunities, deal with challenges… and what would you do if someone wanted to leave or buy out the other?”
Here’s the thing…
I owned my agency for about a year when I took on a partner. It was more of a roll up situation where we each had different areas of expertise. Me with design and sales, him with programming and technology. It was the perfect match for many years. However…
Agencies outgrow people. Whether it’s employees, clients, vendors — even, partners or yourself.
If I was able to do it all again, I’d create an Operating Agreement when we first partnered up. This is a document that details roles and responsibilities of each partner, as well as an exit plan in the event that someone wants out.
“You either know the bad partner or you are the bad partner.” Ideally, you want a Ying and Yang relationship with someone who is like-minded but has a different skill set and area of expertise.
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