Hybrid Pricing Methods
A hybrid model allows for a balanced arrangement between you, the client and me, your agent, for value of the services we provide you. We take a value-based pricing model, and combine it with one of our other methods to manage time and hard cost.
For example, a project-based price in conjunction with a commission-based price structure offer clients efficient methods for managing marketing budgets and advertising spend. If I create several online properties for a client and produce a TV commercial, I'll charge a fixed flat fee based on time, materials and labor. Then, for the TV media buy, the commercial may drive traffic to the online properties but I do not receive compensation based on traffic. If I did, I would be receiving residuals from the client as long as they use the website. However, I will receive a 15% agency discount for the ad buy which is paid by the station, not the client. This way, the client receives the best value for the service without additional costs or fees.
Another way my agency uses a hybrid model is by charging a monthly retainer for consulting or campaign management and then a project-based fee if additional services are rendered for the client. In these situations, I might waive the agency discount I receive from the media outlet and pass the savings to the client, since I am already receiving a retainer.
Project-Based Pricing (Typically used for One-time and Short Run Projects)
Fixed-pricing, or project-based pricing, refers to a pricing model we use to charge the client a fixed price for a specific project. By charging a fixed price, we estimate the amount of time, effort and other costs necessary to accomplish the project. We factor in a profit margin and then set the price. For example, if a client has $1000 for a website, we must manage all our costs incurred to developing the client's website within that $1000 budget, or we lose money. Fixed-pricing is very common with limited-scope advertising campaigns or projects such as website development, etc.
Retainer-Based Pricing (Typically used for Ongoing Consulting and Campaign Management)
A retainer means the client pays us a fixed amount every month to consult and manage their marketing efforts. This fee is the equivalent of paying a consultant or a business coach on a monthly basis to help you with your business, etc.
For example, we may charge a fixed amount, say between $500 and $5000 a month to manage your advertising efforts, depending upon the size of the company and the marketing budget. Or, we may charge a fixed percentage of your overall marketing budget as the retainer fee. The fixed percentage fee is paid in addition to the marketing budget.
Commission-Based Pricing (Typically used for Traditional Media Buys)
This is called an “Agency Discount” which equals 15% of the media budget and is paid out by the media outlet. This is similar to the real estate industry, when the agent receives a percentage from the financial institution closing the sale on the client's new home. The agency discount is paid out by the media outlet because essentially, the time and effort that goes into placing an effective media buy is incurred by the agency instead of the media outlet rep. A discount is placed on the inventory to factor the time not spent by the rep on the buy. The rate is considered a net rate that covers only the cost of the inventory. Having a savvy and effective media buyer guarantees the client that CPP goals are met, that ratings are delivered atleast at 90%, and any added value opportunities are considered. The agency negotiates the rates, guarantees delivery of the ratings, manages any makegoods, manages where the commercials run, and measures return on investment