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Mistaken thinking about agency pricing

On this episode of the Small Agency Talk Show, Brad Farris of Anchor Advisors shares the story of a recent question he got about how to price a website build. Karen Swim of Solo PR Pro and Chip Griffin of SAGA join in to share their own experiences with confused thinking about agency pricing.

The panel explores how agency leaders should be thinking about pricing and what mistakes often get made along the way.

Brad, Karen, and Chip also look at the importance of the prospect’s perception of value — while not missing the point that higher perceived value often requires more work on the agency’s part, not just a higher price tag.

Key takeaways

Brad Farris: “When we’re selling services I think one of the challenges is that we can’t gauge whether what we’re selling is actually what people think they’re buying. I think there’s always a gap between what we think we’re selling and what people think they’re buying.”

Karen Swim: “When fear is the CEO of your business, you’re going to get a business that’s built on fear. When you push fear out of the driving seat, you start to make decisions that strategically makes sense for your business.”

Chip Griffin: “I’ve seen agencies pay more to execute on a project than they actually collect from the client. It’s crazy.”

Resources

WHAT’S MY WORK WORTH?

The following is a computer-generated transcript. Please listen to the audio to confirm accuracy.

Chip Griffin: Hello, and welcome to another episode of the Small Agency Talk Show. I’m your host Chip Griffin, the founder of SAGA, the Small Agency Growth Alliance. And I am delighted to have with me two people who will either keep me on the rails or send me completely off of them. I don’t know, but we’ve got 30 minutes to figure it out.

Brad Farris of Anchor Advisors and Karen Swim of Solo PR Pro. Welcome to the show.

Brad Farris: Thanks, Chip.

Karen Swim: Thank you, Chip. So good to be with you, too.

Chip Griffin: We’re all fired up on this Friday. We had a great pre-show conversation, so we’re going to roll right into it. But before we do for anyone who may not have seen you on the show before caught your own podcasts or great content that you’re putting out.

Let’s do quick intros. So Karen, take it away.

Karen Swim: I am Karen Swim. And I’m the founder of Words for Hire and President of Solo PR Pro, a professional organization for independent practitioners in PR and marketing.

Chip Griffin: And it’s something that every solo should be a member of. Cause you guys have great resources.

Karen Swim: Thank you.

Chip Griffin: Brad.

Brad Farris: I’m Brad Farris. I own Anchor Advisors. We build the leadership capacity of agency founders.

Chip Griffin: Excellent. And Brad also has lots of great content. In fact, one of his pieces of content was the impetus for the topic for today’s show, because I happened to read it earlier this morning. And so it, it got me spun up and then I spun everybody else up in the green room.

So we decided we should run with it. And we’re going to talk about pricing. And this is something that we’ve talked about on this show previously, I talk about it in all of the different venues and media that I have, because it’s important. And because it’s clear to me that a lot of agencies still do not understand how to price correctly.

And so Brad, why don’t you start by sharing the specific story that you shared with your own audience that, that got us running on this topic?

Brad Farris: So I’m a part of a community where there are a lot of small agency founders, and one of them popped in and asked a question, Hey guys, I just want to see if I’m overcharging or undercharging.

What would you charge for a 20 page WordPress website? How would you guys answer that? If someone asked you that Karen and Chip?

Chip Griffin: It’s a question that we get a lot. We talked about this. I mean, we get, how much should you charge for 20 page website? How much should you charge for a press release? How much should you charge for, you know, running an event or whatever.

It is a question that we get all of the time. And it’s an unanswerable question.

Brad Farris: It’s a crazy question!

Karen Swim: Yeah, it is. There’s way too many variables and it’s, it’s going it’s. Yeah…

Chip Griffin: It really does leave you speechless after a while. If you get asked it enough, you’re like really? We’re going here again?

Brad Farris: What I ended up saying is like, this question stopped me in my tracks because I don’t even think it’s the right question to be asking.

Right. Because the only person that can determine the value of your work is the customer. Nobody cares that it’s a 20 page website. In fact, I would go so far as to say, nobody wants a website. What they want is what the website gives them. Right. So, so the idea that there is some value for a 20 page website is like, it’s, it’s…

it’s wrong. It’s just crazy.

Chip Griffin: But, here’s the problem, Brad, you know, you have a prospect comes to you and says, I need a website. I, you know, there’s about 20 pages on it. How much is it going to cost? And so a lot of agencies immediately go into the mode. Aha, I have some possible revenue here. So, what am I going to do?

I’m going to respond directly to that question rather than asking some questions and getting them talking and learning more because you’re right. Most people, they think they want the website, but that’s not really what they’re looking for. And it’s a delicate balancing act because you can go too far on this too.

I’ve seen some agencies where they get so cute about trying to figure out what the prospect wants, that they come back and they say, well, you don’t really want a website. You want a billboard. Now, hold on, hold on, time out. That’s not even in the ballpark of what we talked about, right? But you need to ask questions.

You need to understand because you’re right. The value is determined by the prospect, by the client.

Brad Farris: So if I were doing a 20 page website for a local coffee shop or a 20 page website for an event by a major software company, I would not charge the same for those two websites. In fact, one of them, I would say, Hey, you need to go build a Squarespace site.

And the other one, I would probably charge them six figures. Right. And so like the, it’s not about what it is that you’re selling. It’s about what they’re getting from what you’re selling.

Karen Swim: Yeah, I see this a lot in the PR community and it’s people get so locked in and task driven. So you focus on the task, but it’s so important to take a step back and always be a strategic counselor.

So I agree with you Chip, the question is, you know, somebody presents a task. You don’t just run with the task and then you’re running around like crazy, trying to figure out how to price it. What you have to do is ask the right questions. What are the goals? What, what’s the reason that you believe that you need a 20 page website?

Never be afraid to ask those questions because that’s your true value. That’s the value right there is that being able to guide your customers in doing what’s going to get them to the goals that they want to achieve. They don’t always know that. We give them too much credit. And it’s not because they’re stupid.

It’s just because they don’t have the breadth and depth of your particular expertise, they’re expert at something else. And so they’re coming to you. Maybe somebody told them they need this because they want to do X. Maybe it’s just the thing that they thought was the solution. And the real solution may be, you don’t need to do your website at all.

What you actually need to do is hire a person to focus on content marketing internally. I mean, sometimes the answer’s not even external, it’s internal, I’ve dealt with companies that feel like media is the answer to all of their problems, but they have too many problems to even do media. You honestly have to be brave enough to say, well, You’re not ready for that.

Here’s what you really need. If you want to get there, and, and the reason you want to get there is because you want to achieve these things. There’s a few steps that you’ve got to take first.

Chip Griffin: Right. And I think, you know, this is sort of one end of the pricing spectrum, right? This is where you make sure you get the most that you can for the work.

But we also have a problem in the agency world that we don’t get the minimum that we need in many cases, because we’re so interested in getting the business that we don’t actually contemplate how much it’s going to take to actually execute on it. And so we throw something out there because we heard that number from someone else.

Or we feel like this is what it’s worth. But we don’t understand what the inputs are on our end and, and we really need to know that as well. And I think part of the problem is that there are lots of people out there talking about value pricing for agencies, and frankly, most people completely misunderstand value pricing, right?

They just, most people, when they’re doing value pricing are really just using premium pricing or fixed pricing and they use the term value pricing as a substitute. It’s not, it’s something entirely different. But you need to understand that value, but you also need to understand that cost that goes into it.

And so it’s why I always talk about floor to ceiling pricing, right? The value comes, you know, helps you determine the ceiling, but the floor is what are your costs, because if you don’t know that if you don’t know what it’s going to take to get it done, you’re out, you’re in a place where you could do real serious damage to your business, not just leaving money on the table, but actually losing money.

I’ve seen agencies pay more to execute on a project than they actually collect from the client. It’s crazy.

Brad Farris: I do have one client who says, this is one of these projects that you have to save up for, not one of those projects that you get, you know, money at the end of the month for. So, you know, there are people who are doing that and, and, and it’s, it scares me when I see that kind of stuff.

Chip Griffin: It absolutely should. I think part of the problem is that that agencies historically have been very anxious just to win business. And so they don’t want to rock the boat. They don’t want to make waves. They don’t want to cause any trouble. They just want a simple process. We want you to say yes, just sign the contract.

Or perhaps a lot of them don’t even use a contract. They just say, it’ll be $5,000 for this. You can’t do that. You’ve got to be really intentional about the business that you’re winning.

Karen Swim: It creates this self perpetuating cycle where you do things out of fear, you know, you fear not getting business, you fear not surviving.

And so now you’ve locked yourself and created this infrastructure that makes no sense. And it’s hard to get out of that. I think fear is huge for agency owners. It’s big. And when fear is the CEO of your business, you’re going to get a business that’s built on fear. When you push fear out of the driving seat, and you start to make decisions that strategically makes sense for your business, when you are looking at metrics and numbers and understanding what client work is costing you and ensuring that you’re charging enough, it forces you to look at things in a different way, and it gives you a different sort of confidence.

And it also gives you the confidence to start to turn away things that are not going to be profitable for you. And, and there’s a lot of variations in that too. There’s those hard fixed costs, but then there’s also the costs that I sometimes think people miss, you know, how much time a client is going to take.

Some clients are more costly than other clients. And you have to begin to understand that. You can sometimes turn those clients around and bring down their costs with some communication and some training. But if you’re not even aware to look for that and not to spot that. You think you’re making, you know, $200 an hour and in reality, you’re making 20.

Chip Griffin: Right. Yeah. And, time is the biggest resource that agencies, I mean, agencies are selling time. You can pretend you’re doing all sorts of other stuff, but you’re, you’re selling time in some form or another. And so if you don’t know how much time that you’re putting in, and particularly you as the owner, particularly in a small agency, right?

I mean, the owner is, has the resource that that should be by far the most expensive it’s, it’s the resource that you can’t just go out and get more of easily. And so you need to make sure that you’re pricing appropriately, particularly if you’re going to be directly involved with the work.

Brad Farris: Well, I can always give up my weekends and every evening and, you know, make more of my own time.

Chip Griffin: Really, sure.

And then you put that you’re diluting your effective, hourly rate. And so now, now what you imagine is your $200 an hour rate is suddenly a $20 an hour rate because you’re putting it off and you’re frustrated and you’re tired and you don’t want your business anymore. Why would you do that? Don’t start your own business if you can’t do what you want with it.

Brad Farris: And you know, is the 11th and 12th hour of your day as productive and effective and creative as the first and fifth hour of your day?

Probably not. Right.

Chip Griffin: Not usually, not usually. And I think, I think that, you know, a lot of agencies go through the cycle, they start out with the small businesses, right.

Cause they’re like, this is, I get it. This is easy. There’s lots of them. I, you know, I’ve got the relationships, I can win it. And then they say, oh geez, I can’t charge them enough. You know, they’re, they’re small. They won’t pay, you know, what I really need to. So then all of a sudden that the pendulum swings the other way.

They’re like, oh I need to get Fortune 100 companies, right. I, I need to go, you know, because I, I, I watch online and I hear these people talk about value pricing and how FedEx would pay so much more for a logo than your local restaurant, which is true. But guess what? It’s also more work. It takes a phenomenal amount of work to, to create a logo for a large company.

It’s not just, you sit down at your computer and you come up with a nice little design and illustrator and pass it on. Like you might for a local restaurant, you have committee meetings and you have trademark attorneys and you have multiple reviews and all that because it’s a bigger project. Right. So it’s not just that they value it more because they’re gonna use it more.

It’s also gonna take you a heck of a lot more effort to get it done.

Brad Farris: So, this is how – I love the way you frame that, Chip. Because when I think about pricing, what I want to start with is the client, what is the value to them? Right? So let’s say they’re coming to you because they want a website and you can say, well, how much are leads worth to you?

And if you had a new website, how many more leads do you think that would, that would mean to you? And you know, how effective is your current website? And so you’re, you’re doing some analytics, you’re doing some math to figure out, what do you think this, if you could do a website for them, what would that produce for them?

And then come back and say, okay, if let’s say that this would produce a hundred thousand dollars in value for my client, what percentage of that would they pay me? They’re not going to pay me that whole a hundred thousand, right? So let’s say it’s somewhere between 20 and 50 thousand. Now I can say, what can I do for 20,000?

And what could I do for 50,000? And I can create some options that would show them, you know, if you’re not going to say it this way, but the truth is if your confidence is low, let’s do this $20,000 project. If your confidence is high, I let’s do this $50,000 project. And now we’re having a conversation with them about what they’re valuing and what risk is worth.

Karen Swim: I love that. I love the FedEx example because I think, you know, if you were to compare that, so a logo from FedEx with the logo for a mid tier company, with fewer approvals, fewer people involved in the process, net net, you really should be making the same amount of money. Really, it’s not like you’re making so much more money because there’s a larger price tag.

You’re looking at how much time and effort is included in both of those things. So at the end of the day, both of those projects may yield you the same exact profit margin. And that’s really okay. That’s an acceptable thing. As long as it’s used appropriately. You know, you can’t just slot these things in, there’s not like a template.

I know people love to talk about Ray cards. But it’s not like you just slotted it in. And like a logo is a logo and it’s always a logo. Well, it’s not really, you know, in the same way that earned media is not, it’s not something that’s plug and play. Doing our media for a funding release is very different from doing media to, you know, get some thought leadership pieces.

The effort is very different. You’re going to spend a lot more time on funding. So understanding that is really important. That’s a good example, I think that people could really relate to.

Chip Griffin: Well, and I think ultimately you need to understand that, you know, you’re not selling the exact same thing, right? So it’s not just that the scale is bigger.

In one case you may be selling the actual logo design. Right. But what you’re actually selling when you’re selling the logo to FedEx is the focus groups that you’re doing. All of the strategic meetings that are going to. Things that you’re probably not doing with your local restaurant when you’re creating a logo. You probably are just creating the logo for them. You might have a little bit of a conversation, about the feel they’re trying to create and all that kind of stuff, but it’s not the same level.

And so you’re selling a whole suite of services. And so the whole notion that, that some folks push that, you know, you, you charge more for a logo for FedEx, just because they’re FedEx is not really true. It’s, it’s everything else that comes with it. And I, I do want to go to this, you know, the, the asking the questions part. Because I think you both have made some good points there in understanding the value. I think one of the most important questions to ask anytime someone comes to you is why are we here today? Why are we talking? Right. So before you even start to get into what’s the value of a lead, or how is your website performing now?

It’s, why are you here? Because something caused them to show up on your doorstep and ask for that website. And sometimes it’s the obvious thing. Sometimes it’s because it’s underperforming. Sometimes it’s something kind of silly like, yeah, we just, we just feel like it needs to be fresher. You know, we’re tired of looking at it.

Well, you are, but is everybody else tired of looking at it? Right. Is it doing what you need it to do? So, and it’s the question I always ask when an agency comes to me and the owner says, you know, I’d like to work with you. Why? You know, what is the specific pain point that caused you to say that today of all days, I’m going to reach out to you and ask for this meeting. Because if you understand that, then that really helps shape the rest of the conversation.

Brad Farris: Well, I mean, the second why I think is also important is, okay, so you had this thing that made you want a website, why’d you call me? Why am I special in this? Cause that also tells you a little bit about what your pricing is. Oh, I’ve got a list of 15 people and I’m calling all of them. Okay. Well, that’s one story or, you know, you’re the person I want to do my website and I’ve known it for five years and this is the chance that we have to work with you.

Okay. That’s a different pricing.

Chip Griffin: Yep. Absolutely. Yeah. It’s about having conversations, right? I mean, we’re, we’re all in the communications business in some way, shape or form, no matter what kind of agency we are, we don’t communicate very well internally or externally.

Brad Farris: Especially not in sales conversations.

I think that when, especially when numbers get to whatever a big number is for you. We start to get all knotted up inside, right. And we start to stumble over things and we, and we lose the flow and the script that we’ve used over and over again, to be successful.

Karen Swim: Yeah, I, you know, communicators. You’re absolutely right.

I have found that they really personalize financial discussions. They’re not good at negotiations or sales. I came out of sales. So I started my career on the sell side and then went into marketing and then PR. So I’m super comfortable in negotiating and money’s not personal. Then again, the client relationships, the people relationships are personal, but I don’t take any of the rest of it to heart.

You know, it’s business. Not, there’s no emotion about business, it’s just it’s business. And you know, that people are going to come, then people are going to go and I’m never afraid to say no to something that is not right for me, for whatever reason that is, the price or whatever. One of the first questions that we have when we take a call with someone and we find out some information before we even agree to a call, because sometimes it’s just a matter of in an email, you can get enough information or if somebody’s referring and you can say, yeah, I’m not a great fit, but here’s somebody else that I can recommend. But if we make it to the actual phone call, we’re always going to ask, what were you hoping to get out of a PR program? What does success look like to you?

Because that’s where your answer lies. They’re going to give you a lot of information and then we can really start to dig deep and talk about some of the things behind it and understand, you know, do they – why are they choosing PR? And you need, you, you need to know that, not just for pricing, but you need to understand if you can meet expectations and people are coming to you with unrealistic expectations.

And you’re so focused on the task, like, yay. Somebody chose me. I’m so happy. And they want me to do earned media. But you’re not going to be able to get the result. I don’t care how much they pay you. That’s going to be frustrating and it’s not going to be good for your reputation. It’s not going to be good for them.

It’s not going to be good for you.

Chip Griffin: Yeah. And I think part of the problem is that people think of agency business development as selling. And I really, I encourage folks not to think about it in terms of sales, because you’re not, you’re not selling a car or a widget where all you really care is does the check clear, right?

What you’re doing is you’re doing matchmaking because you have to find the right fit between you and the client, because you’re going to be working together. Now I hate the term partners. So stop saying you’re partners with your clients. You’re an ally. You’re not a partner, but anyway, we can have that argument another day, I suppose. You need to find the right matches.

And that means the right work, the right expectations, the right price. It’s the whole package that comes together. And you don’t want to look at it as sales where the goal is I started the conversation and it’s win or lose, right? That’s the objective. It’s not, it’s the right fit.

Karen Swim: But I, you know, I almost can’t blame communicators because we see in the people who sell to us and, and I agree it’s all about solutions and helping people to find a solution, but we see such terrible examples.

I can name companies that are just such a turnoff. And so that’s what we’re met with. And so we have all these examples around us, of people that simply want to part us from our money. We see it with clients, you know, put out a funding announcement and everybody comes out of the woodwork pretending to offer you earned media when they really just want some of your money.

And, and that’s, and I get that. On a daily basis there’s just people that are in your inbox in LinkedIn and they just want your money. They’re not trying to help you. They don’t even understand what your needs are. They’re just throwing something at you. So I think, you know, as a communicator, you’re seeing this all the time and to you, that’s what selling is and it’s icky and you don’t want any part of it.

And then you never learn that it’s a true profession and a discipline and that there’s a right way to do it and there’s techniques. And that there are things that you can learn and there’s a structured approach because you don’t know any of that. You just know how it feels when it’s done to you.

Chip Griffin: Right. The problem is that traps agency owners in a cycle of misery, right? We’re there, they’re miserable with the clients that they have. They’re miserable with the process that they have to go through to get more clients, because they’re not, they’re not being thoughtful about it. And you really, you really need to be intentional about what you’re doing with your business, because if you just allow things to go, as they always have – and part of this is because most agency owners are accidental. Most agency owners never set out to build an entire business. They started out as a freelancer, maybe between jobs or something like that. And they just suddenly got enough business that they could hire some contractors and then maybe they hired employees.

And so it’s all been just sort of, you know, chasing whatever today’s crisis is. And they never take the time to step back and say, where do I want to go? What do I want to be? What do I want to get from this?

Karen Swim: Isn’t that sad? That makes me so sad. I mean, I, I’m on a mission to try to help people erase that because you know, to me why start a business, if you don’t get to really enjoy all of the things that that offers? And it’s freedom, you get to choose, you get to build your environment.

You get to choose to work with people that you’re passionate about working with that, that gives you that career satisfaction, that you really enjoy the people. I mean, Why be miserable and have your own business? If you’re going to be miserable, just go back to corporate America, take the check, take the, you know, 401k and call it a day.

Brad Farris: It’s funny. Cause I think one of the things that causes people to be miserable in their business is when they’re thinking I need this business, right? I need this job. I need this project. And when we start to feel like this project is the solution to my problem. We don’t do a good job serving the client.

We don’t do that selection process that Chip was talking about. And, and, and we do end up just being in it for the money. And we’re not very good at being in it for the money. Cause that’s just not the people we are in general. Right. And so getting out of that feeling like I need this project is, is a big part of getting to the place where we have that freedom to say no to business that isn’t the right business for us.

Chip Griffin: Right. Then it becomes a vicious cycle, right? Because the way that you get out of this is you price correctly, because the more often than not, when you start getting desperate for new business, it’s because you priced your existing work incorrectly, right. You’re not getting what you need from that engagement. And so at some point you have to just make the decision I’m going to pick the right clients.

I’m going to price them correctly because otherwise you will never break out. You will constantly be. I mean, I have a lot of agency owners come to me and talk about feast or famine. I’m stuck in feast or famine. Now part of that is because they don’t understand their own books. Right? Part of that is because they’re, they’re looking at cash accounting rather than accrual accounting.

And so they get a completely distorted view of their business. Cause it’s just when the money’s coming in the door. And when you start looking at it, it tends to be a little bit more even than they give it credit for, but part of it’s because they’re just so bogged down because they didn’t price it correctly.

So they do, they and their team have to work all of these hours. I mean, we hear about all the people who are frustrated working for agencies because they’re being asked to work 18 hour days. Why are they being asked to work 18 hour days? Because they didn’t price the work correctly. If you price it correctly, you should never, ever have to do that.

The problem is that agency owners price wrong and then balance the books on the backs of their own employees by making them work too hard.

Karen Swim: Yes. You’re saying you’re all in my playbook right now. I love this. This is my favorite thing to tell people is that you can work four times as hard.

Because you’re pricing too little. So if you’re making, let’s just take a number $10,000, but it’s a month, and it’s taking you four clients to make $10,000 working four times as hard. But if you choose a client that’s a $10,000 a month client you’ve saved bandwidth. You’re still making the same amount of money.

That’s not price gouging, it’s pricing correctly. And it means that you can have fewer clients. And still make the same amount of money, which makes more sense to me, but you know, who am I? I’m just a girl who does like numbers and math. I don’t know. And I love walking my dog in the afternoons and I do that because I don’t take on a bunch of random stuff that’s going to sap my energy and have me all over the place. I mean, the other thing that people don’t realize when you price incorrectly, you’re having to work so hard to get to that number that you need to live. You’re exhausted. That’s exhausting. It’s exhausting to have 25 clients versus 10.

Brad Farris: Can I throw a couple other things out there about small clients? When we’re selling services I think one of the challenges is that we can’t gauge whether what we’re selling is actually what people think they’re buying. I think there’s always a gap between what we think we’re selling and what people think they’re buying. And that gap is larger if the person you’re selling to has never bought this service before. And so if you are somebody’s first agency, the likelihood that you are pricing to their expectations is very low. Like to me, if this is someone’s first agency relationship, all kinds of warning bells should be going off for you. That probably their expectations are much higher than what you’re actually offering.

And then the second way that that happens. And this is also something that happens in smaller clients is if someone is choosing between paying you for a website and paying for their kid’s orthodonture bill, like if people are spending their own money, that is another way where expectations get all out of whack.

And so if you’re working with a professional on the other side, who has a budget that they want to spend on this project, you’re much more likely to end up in that happy place.

Chip Griffin: Yeah, anytime you can work with someone who’s using other people’s money, you’re in much better shape for the long-term.

You can close business more quickly typically when it’s coming out of the client’s own pocket, but the problem starts to kick in once you start working for them and they start having inflated expectations, because they’re sitting there saying every dollar I give you is a dollar I could just keep in my own pocket. Which goes back to the point that Karen made.

And I think it’s a really important one. You need to be honest with yourself, how much you need to make from your business and how much you want to make from your business. It, unfortunately, most agency owners, most solos start out by saying, you know, what business can I get? And then I will take the profits from that. That’s completely misguided.

You actually need to know what you want to get, because then you know what your effective hourly rate needs to be, which then helps drive that pricing decision. Because you can say, you know, if I can bill a thousand, fifteen hundred hours a year, something in that general timeframe for a small agency owner or freelancer, then you can say, okay, if I want to make a hundred thousand or 150,000 or whatever it is, I can do the math, right.

Simple math, but I can do the math. And I know that for my time, I need to be charging at least that much. And that’s where people fall down. They’re not honest with themselves about how much they actually need to make from the business in order to both survive and ultimately be happy.

Karen Swim: Yeah, I agree. And once, you know, that effective, that effective rate…

and I just so that we don’t skip this step because I know that you were including this in effective rate, but some people don’t realize you also need to understand what it costs to do business because charging one thing is – that’s only one piece of the equation. So your rates need to be higher for you to get the effective rate that you want to take home because you do have to deduct what it costs you.

And that includes client tools. You shouldn’t, you know, I have all kinds of pet peeves about the way people price that. You shouldn’t be nickel and diming your clients for every little service. You need to build that into the cost of doing business. I don’t bill my clients a and I know some big agencies do this. They charge like an admin fee to their clients every month.

That bugs me. It bugs me. Why would you do that? Add those admin fees, charge enough money so that it’s all covered. So if you know that you spend X amount of money on your media database, your monitoring solutions, your CRM, whatever other tools you need to do to do business, that all becomes a part of your expenses.

And your rates should cover your expenses and then you should have a profit on top of that. So it, it just drives me insane. And I think, you know, as a customer, I don’t want that. Do you want DTE saying, well, here’s the base price, but then I’m going to charge you this every month because we’ve got a… Just tell me what my rate is, and then let me make a decision.

I don’t want you to charge all this extra stuff on top. I don’t want to see a bill that has an admin fee in it because I’m going to call you up and say, what’s this admin fee? And then who else can I choose that’s not going to do that to me?

Chip Griffin: And unfortunately, I mean, it used to be the norm in the agency business that you did all those things.

I mean, when I got started in the agency business, 30 years ago, you had a code for everything. You got a code for the copy machine, the phone, the fax machine, and you billed every single page. That was a per page fee for faxes that you would send on a client’s behalf, you would charge them for their, for the long distance phone calls.

And for you kids out there, you used to have to pay different for long distance and local. There were no cell phones back then. So all of these things were, and so there’s a, there’s a culture in the agency industry of doing these things and it’s just dumb. Don’t do it. Keep it simple. You don’t want to have fights with your clients over dumb stuff.

Just charge a fair rate, wrap it all into the total cost of doing business. But unfortunately, that’s going to bring us to the limit of the time that we have available here. Because even though we’re not broadcasting on CNN or CNBC, even though we probably should, I think this would be excellent lunchtime viewing for CNBC viewers.

We still try to stick to 30 minutes.

Karen Swim: CNBC, are you listening?

Chip Griffin: I’ll just be happy if anybody’s listening. Karen. So in any case, we do appreciate everybody who has taken the time to listen. If you want to see a replay of this, you can go to smallagency.tv and all previous episodes of the Small Agency Talk Show, including plenty of episodes featuring Karen and Brad, together, apart, separately, all sorts of stuff. So there’s just good stuff there. So go there, listen to it. Make sure that you check out Solo PR Pro and Anchor Advisors because they have tremendous resources. Get on their email lists, collect their information, watch their videos, and you will be smarter and better for it.

So with that, I wish everybody a great weekend have a very productive week ahead. And I look forward to seeing all of you back again very soon.

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