Are You Afraid to Raise Digital Agency Prices?

By Jason Swenk on June 29, 2022

When was the last time you raised your prices? Do you know your profitability on each of your clients? If you haven’t raised your prices for legacy clients in a while, you’re probably losing thousands of dollars of revenue. Fear of increasing prices is a very common issue for agency owners. However, overcoming that fear might be easier than you think once you get out of your own head.

As Agency Scale Specialist on our team, Darby Copenhaver talks with hundreds of agency owners and finds that one of the most common fears is raising prices. It is a hard conversation that you should have with yourself and your clients. If you are transparent and communicate your value it will never come as a surprise.

In this episode, we’ll discuss:

  • Agency owners’ fears around raising their prices.
  • Understanding and communicating your agency’s value.
  • Good systems to raise your prices and be more profitable.


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2 Most Common Fears Around Raising Agency Prices

Darby spends a lot of time helping agency owners get to the next level and says many of them are scared to raise their prices. For the most part, they seem to be fine with raising prices for new clients but stop themselves from increasing for existing clients. They will typically justify the decision by saying those clients helped them get to where they are now. However, that is like not taking credit for all the work you’ve done to grow the agency.

  1. Loyalty to Legacy Clients – As an agency owner, you may feel a certain sense of loyalty to your oldest clients. They’ve probably been with the agency for years and it’s logical that you want to continue that relationship. You may also believe in order to raise prices, you need to provide additional value. However, if you’ve been working with a client for five years you should consider that you are most likely much better at what you do after five years of experience. Those clients are now getting a better quality of services and strategy for what they were paying five years ago. This is not how it works in any other industry.
  2. Balancing Capacity and Pricing – Another big challenge agencies face is bandwidth. They find it hard to keep up with fulfillment and delivery as the agency grows. By not raising your prices, you’re handcuffing yourself to a client at a discounted rate. Meanwhile, you’re bringing in new clients at higher prices. It will take you the same amount of time, effort, and energy to complete the tasks for the legacy clients as for a new client. Basically, you won’t have the time and bandwidth to bring on more new clients paying the right price. In this sense, your loyalty is getting in the way of your growth.

Understand and Communicate Your Agency’s Value

Darby usually asks agency owners if they are effectively measuring and communicating client success frequently enough. It is commonly a question that takes agency owners a few minutes to answer and very few have a good answer.

Communicating client success can be a challenge depending on the type of agency. To start, focus on asking the right questions. You should really know what the client cares about from your onboarding process. This way, you can know what to measure for success.

If you’re doing that part correctly and getting it right from the beginning then you’re setting yourself up for success. You’ll be able to relate back to them the results that you’re getting in a matter that they know, understand, and care about.

Communicating the value you’re providing to clients is also crucial when it comes to the team. Your team should understand the value of their work for each client and why you charge what you charge. If you’re not communicating value efficiently to your team then you’re probably not communicating it to your client either.

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3 Good Systems For Raising Agency Prices

  • Have a healthy sales pipeline. You have to have predictability so you can be selective. If you’re raising prices for new clients coming in, you should have new opportunities lining up right behind them in case you need to rethink your pricing strategy. At the end of the day, it’s an experiment, so make sure you have a plethora of opportunities so you’re not just relying on the few you have in front of you.
  • Include price as part of your success conversations. Part of the success conversations you should be having with clients needs to be laying the ground for upcoming price increases. Talk about what you’re investing in new technology, talent, training, etc. In short, all the things the “behind the scenes” things they don’t see but are contributing toward getting them more effective results.
  • Start with the right mindset and expectations. Be prepared to lose clients as a trade off for more profitable ones. Expect that you may lose a few legacy clients and set the new pricing in a way that you’ll be OK when that happens. Digital Agency Elite Mastermind members have said after getting the courage to double their prices and preparing to lose a few clients they ended up not losing any because their clients actually expected the price increase.

Training Agency Clients to Expect Price Increases

This is something that Jason and Darby discuss with mastermind members all the time. It’s part of building a relationship with your clients. You don’t go for the long-term, hard sell right away before you gain their trust. It’s a lot to ask someone to enter a long-term commitment, like a retainer, solely based on case studies and past successes. Instead, start with a foot-in-the-door offering.  Build a relationship, show some results and some wins which naturally lead to talking about a long-term commitment like a larger project or retainer work.

By doing that, you’re already building a relationship and trust where you’re no longer competing for price. You’ve proven you can get the results you promised and the price won’t matter. It also won’t be difficult to justify because there is now a foundation and an understanding of the value you bring to their company.

Other than that, once there is a relationship you should train your clients to expect a price increase at least once a year. If there are big gaps of time between raises then you’re training them to see it as a rare occurrence.

By contrast, if each year you raise a percentage based on inflation and upgrades and you’ve already established communication with them where they understand the results you’ve gotten for them, they won’t question it.

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