I’ve got a couple of tattoos. As I was considering my first one, I was given this advice by a heavily tattooed friend.
“Good tattoos aren’t cheap, and cheap tattoos aren’t good.”
That advice applies to most things we buy. There’s a certain price threshold below which you’re getting inferior stuff. In some cases, that’s okay. Single-use items come to mind. They only need to work once.
Marketing isn’t a place where that makes sense. The success of your business depends on marketing. It needs to work consistently and well over time. That’s why we’re unlikely to ever be the least expensive agency option.
In a prior post, I mentioned that we compensate our team based on the value they provide to our company. Our pricing philosophy is similar. We charge our clients based on the value they receive from the services we provide, quantifying the results of the work, rather than the labor. This allows them to gain several advantages.
- We serve fewer clients. There are companies that don’t value marketing. (Wait, what? How can that be?) Those companies won’t ever be our customers. Our clients get more individual attention for their marketing dollar.
- We serve better clients. Companies that understand the value of our services are delightful to serve. They know we are giving them our best. The relationships we have with those clients drive us to go out of our way to find more ways to help.
- We value our work. We enjoy being able to do our best work for our clients, and our pricing allows us to do that. Our best clients value our efforts and results as well, and they cheer us on! (They also refer us to others!)
In the end, we cost less.
Let’s say you hire a less expensive agency to do your marketing – one that’s below the price threshold at which you’re getting inferior services. Those inferior services end up costing more in many ways, but most can be classified in two ways – opportunity costs and replacement costs.
Inferior marketing services will garner lesser results. Opportunity costs make up the difference between the results you’d have gotten from better services and the results you received. Essentially, by using a cheaper option, you’ve missed opportunities for more conversions, more growth, and more brand equity. These have long-term impacts on your future success.
Eventually, you’re going to be dissatisfied with the inferior results, the inferior customer service, or both. That’s where the second costs come in. Firing a marketing agency and finding another one costs time and resources, not to mention stress. Those are replacement costs.
In the end, you can avoid these costs with value-based pricing. Yes, you will pay more upfront, but in the long haul, you avoid stress, opportunity costs, and replacement costs.
John’s the founder of Audacity Marketing. When he’s not racing motorcycles, he’s building marketing strategies for Audacity clients and anyone else who’ll listen.
John’s worn all the marketing hats, from consultant to agency owner to executive to university professor. He’s held leadership roles in industries from staffing to behavioral health to capital-C consulting. He’s branded or rebranded over 100 companies.
John buttresses 25+ years in marketing with an MBA from Georgia State University.
John lives with his girlfriend Suzanne, his dog Seamus, and his daughter Annie when she shows up from college.