How Flexible Is Your Agency’s Pricing Structure?
I want you to stop what you’re doing right now and think about your favorite restaurant.
The one where the ambience fits your personality like a glove. The one where you have a list of favorite dishes that you rotate through – just to give them all a fair chance, of course. The one where the service is both friendly and efficient. And, of course, where the bartender knows just how you like your martinis.
Feeling a little hungry? Good.
Now think about what you would do if that restaurant wanted to lock you into a monthly service level agreement, where you agree to pay them a certain dollar amount each month for a set number of visits. If you don’t use them all, it’s your loss – no rollover. If you end up going more often than your agreement specifies, you’ll pay much higher prices. Would you go for it?
Probably not. Why? Because there are just too many moving parts for you to know with any degree of certainty how many times you’ll visit that restaurant in a given month. Maybe you’ll travel more than usual. Maybe the kids will have soccer practice every other night. Maybe you’ll lose your job and have to cut back on spending for a few months. Unless you can predict the future, it’s just too risky.
Although it sounds silly when you look at it in the context of a restaurant, this is exactly how approximately 70% of agencies set their pricing structure: with Service Level Agreements (SLAs). You agree to deliver a specified number of deliverables – 10 blog posts, one e-book, two white papers, etc. – for an agreed-upon monthly fee.
Why does your agency price this way?
The umbrella answer is that an SLA system lets you predict monthly revenue. But let’s dig a little deeper.
For one thing, the work involved in taking on a new client is heavily front-loaded: You have to learn their product line, their customers, their language and voice, etc. Understandably, most clients would balk at paying a huge upfront fee before they even know what they’re getting. SLAs let you spread that upfront cost out over several months, avoiding that initial sticker shock.
One of the main reasons agencies use SLA pricing, however, is staffing. If you know exactly how much content you’ll need to produce each month, you also know how many employees you’ll need to produce it. Otherwise, you’ll find yourself making a choice between not having the bandwidth to go after a great new opportunity or having too many employees with too little to do. And, with the average employee – the ones with plenty of work – being productive only 80% of the time, the thought of paying employees who have extra time on their hands tends to make agencies gulp.
SLAs fix that problem. But there’s a downside.
Do SLAs make sense for clients?
As with the restaurant, clients might think it sounds good at first: SLAs seem like an easy way for them to know what their expenses will be.
Soon, however, they realize that their content needs are too dynamic for SLAs to make sense. Maybe they’ll be launching a big promotion and will need additional content to support it. Maybe sales will be down, or they’ll incur unexpected expenses, and will have to take a break for a month or two.
SLAs just don’t provide that kind of flexibility. And, with “business agility” being at the top of everyone’s strategic planning agenda, that’s a problem.
What’s the answer?
Since the main reason agencies like SLA structures is so that they can predict staffing needs, it only makes sense to start by channeling Goldilocks and asking questions like, “How can I get my staffing just right without SLAs?”
The answer is what you could call “a blinding glimpse of the obvious”: freelancers.
Using freelancers lets you scale up for rapid growth or to take advantage of unexpected opportunities without committing to the costs associated with hiring a permanent employee. You keep your in-house team at a level that meets your basic needs and hire freelancers to fill in the gaps.
Isn’t that risky?
Less so than hiring a permanent employee (we all have our horror stories).
The upside to using freelancers to escape the confines of an SLA pricing structure? Clients love it. nDash.co was founded and designed based on the success our former content marketing agency had working with freelancers. When the agency, nDash Marketing, switched from an SLA structure to one where clients purchased credits and could “spend” them however they wanted, clients were thrilled. They saw how much value there was in not being locked into buying a set amount of content each month.
The downside? There isn’t one. Supplementing your in-house staff with freelancers is a risk-free way to stay agile without having to choose between having underutilized employees surfing the ‘net all day or missing opportunities due to limited bandwidth.
Fortunately, thanks to the booming freelance economy, our new platform is filled with talented freelance writers and is designed to make it easier for marketing agencies to work with them. Once you sign up for nDash, you can either throw an assignment out there and choose from the top-notch writers who apply for it, or you can sit back and wait for those writers to pitch you, which can be a great way to get new ideas (not to mention drastically reducing the time you spend on ideation).
All communication, content submissions, revision requests, and payments are handled right there on the platform, making working with freelancers easier – and more effective – than ever before.
Ready to thrill your clients while making sure your agency is ready to handle whatever comes your way? Visit nDash today to learn more.