When you own a SaaS business, there will always come a time in which you have to make a decision about hiring a PPC agency or a LinkedIn ads agency to help you. Many questions cross your mind: how are they going to mesh with your in-house marketing team? How much is it going to cost? How will I know the best pricing model for me? In this article, we’ll dig into this last question and discuss how SaaS marketing agency pricing works.
However, it’s not easy to answer this question without taking into account a few factors. There are several SaaS marketing agency pricing models, and you have to ask yourself:
- Does your in-house marketing team has a plan, or do you need the agency to design the whole strategy from the ground up?
- What kind of channel do you want to use? Or do you want the agency to advise you on this?
- How long are you going to need agency services?
- What are the main KPIs that can measure the success of your campaign?
There are many SaaS marketing agency pricing models from which you can pick, but the following are the ones to be expected:
1. Hourly Rate
In the past, this was the most common pricing model in marketing agencies. It is pretty straightforward: for each hour worked on the project, the agency charges a set rate. However, this model has become less used for one main reason – it removes the incentive for the agency to work harder, making your consultants and other employees from the agency try to bill as many hours as possible.
Of course, that does not always happen. But it’s a common risk, because agencies, like all other businesses, need to ensure profit. In this day and age, hourly rates are considered old-fashioned and not a safe bet. However, if you have a project in which you have an exact notion of how long does it take to complete, you can go for this SaaS marketing agency pricing model. It is also a flexible model, in which costs can be adapted as the project evolves.
2. Fixed Price
This is a common way for SaaS marketing agencies to charge for their services because it is based on a rate that is agreed upon before work begins. The advantage is that there are no surprises for either part: however, once the project grows and more services are added, this pricing model might be too strict and not flexible enough.
We recommend using this pricing model whenever you have a strict budget and aren’t planning on spending anything else for your project.
This SaaS marketing agency pricing model has become increasingly popular among many companies, and it is based on a monthly fee that includes a specific set of services. This model includes specific KPIs that need to be achieved, targets that can be set monthly, or at a different frequency.
The advantage of this model is how easily it can be adapted to your business needs by adjusting the monthly retainer. If you need more services, your fee can be adjusted from one month to the next one, which gives you flexibility.
Nonetheless, these retainers are usually dependant on pre-set targets and budgets, so it’s not like there can be many surprises for you. This is a straightforward method that we recommend if you’re not sure if you might need more services from the marketing agency of your choice.
Performance-based pricing models are usually associated with sales. What this SaaS marketing agency pricing model entails is an agreement to pay for each lead, or when a specific sales target is achieved.
This is quite risky for agencies, but if they’re confident in their strategy they’ll accept it. It is also highly rentable for your SaaS business since you pay only for what you get.
Not many marketing agencies are usually up to using this type of pricing, considering the uncertainty it brings. But it is a way to motivate the agency to bring all their best tactics to the table since your success is their success.
If the agency is working with a specific media or technology vendor, they can earn kick-backs from that vendor. This creates a system in which the vendor rewards the agency and not all profit comes from the client.
This type of pricing model is usually a good deal because kick-backs can allow the agency to offer its clients a discount on the services they offer. This has become a common pricing model when there is a media partner or seller on which the agency depends on for offering that service.
There is also another way to do it, which is for the agency to charge a fee according to the value that’s being paid to the vendor. This makes costs transparent for the clients.
6. Hybrid models
If we’re being honest, all pricing models have their faults. But hybrid pricing models are fair in our opinion and they offer you the best of both worlds. Common combinations are:
- Using a monthly retainer that is adjusted according to quarterly results and new needs;
- A fixed fee that gets incremented when some goals are achieved by the agency, giving the employees an extra motivation boost;
- Limited kick-backs that allow both the agency and the client to constantly increase their profit.
There are many other ways to combine each pricing model with another, and it’s up to you to decide with your chosen agency how you’re going to go about it.
We recommend discussing pricing models with the agency as soon as possible, so you don’t get stuck in a model that does not fit you before having agreed on what’s best for your business.
As we mentioned before, we recommend a hybrid pricing model that allows for a fixed monthly retainer, while including the possibility of something extra if your KPIs are achieved.
This SaaS marketing agency pricing model offers flexibility and reliability, and we believe it is fair for both the SaaS business and the marketing agency.
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