I'm in the process of launching a web design agency and I'm having trouble nailing down a workable business model.
My strengths are in landing pages, sales funnels and Wordpress websites – All geared to boost growth using a balance of high-end design, user experience and conversion strategy.
My clients are techy savvy (not small 'offline' businesses) and don't need a lot of hand holding. So think experts, bloggers, other digital service businesses/agencies, consultants, etc.
Models I've thought of so far:
#1 – 'Hire a design team for $X,XXX per month' retainer style model.
#2 – Break up our services into packages with clear pricing (eg. Wordpress Site - $X,XXX, Landing Page - $X,XXX)
#3 – Charge per project a-la-carte and do not publish pricing.
#4 – Specialise and only offer one thing (eg. High converting landing pages)
My question is: If you were launching a new agency or digital service business, what model would you use?
I'm glad you described your market a bit.
I have not seen a retainer model work in this space, but that's not saying you can't succeed with it.
YOU are the expert, so I would not leave it to clients to choose what they want. If you do, you'll get clients who say, "Yeah, I hired them to make me a page; it looked nice but didn't work"--and who is responsible for that?
I have seen both arguments when it comes to the question of displaying pricing. I think you should show it. That's a qualifier for visitors, and you do not want to waste your time and energy on people who cannot afford your help.
So my recommendation is to list your services with pricing, but make sure you have a lead capture system to pre-qualify. Then talk live to fully qualify and give your expert recommendations.
I kind of like #4, but there is so little opportunity cost in you being able to offer all the other kinds of content...I would only take this approach if you are committed, really want to specialize, and get known for these kinds of pages.
I am going to shameless promote here, I own a digital marketing business myself and have ownership in another agency that does both websites and marketing so I know this space and I would love to talk to you more about it and help you grow.
The phone is your best friend and we have tried both up front pricing and quote only pricing and we have had lots of mixed results depending on the area.
There is a lot of things you need to consider before you set your pricing, such as costs, profit margins you want to maintain, and what you are worth. Once you have those metrics you can more easily price.
Not a lot of detailed information but to be honest in order to protect my own trade secrets I don't want to post more than that here.
I had this debate often with the freelancers in my network when I established and ran The Village Agency, a purely freelance agency with a disruptive model. My answer is that would could test and learn from all of these. Create different landing pages for all options and assess each opportunity on the basis of what would best suit the client while optimizing for SEO and organic leads... see which gains you the most traction and track which garners you the best profits. I am not sure your answer lies in a silver-bullet approach.
I remember when I started my digital agency out of my apartment back in 2011, kudos to you for taking the big step, you'll enjoy the ride.
I own a digital agency called Noticed based out of Philadelphia, PA. I've pretty much made all the mistakes in the start-up phase of the business over the last 3 years, as well as tried nearly every business model.
Below is my responses to each of your models:
1.) This seems like a virtual teams model and its more driven towards larger companies who can afford to hire a team each month. The advantages of this model are 12 month contracts and reoccurring monthly income, and the profit/loss is fairly easy to determine. If you decide on this then you need to primarily position yourself as a virtual teams agency with a USP.
2.) I mentor many start-up web agencies and I've never recommended packaged pricing, because it limits your growth. Also you reach smaller clients vs larger clients and it comes across as cheaper services to clients who have value for their digital presence. If you want to charge $20-100k for a WordPress website, then you need to go with option 3.
3.) Our agency follow the a-la-carte pricing model and its helped us grow significantly, this is due to fact we branded and positioned ourselves to target clients who don't look at the price 90% of the time and are looking for value. Not only that, we built a really strong sales process that allows us to target clients who are spending $50-200k on a website. I would go with this option without a doubt.
Extra Tip: I would recommend adding Maintenance & Support, SEO and PPC services to your business model. You can sell these services to the clients on a 12 month contract which will give a stable income to concentrate on fixed bid projects.
If you ever need to jump on a call and get some advice/direction, then feel free to reach out to me.
Start with #4, for 5 reasons: You know conversion rate optimization (CRO); your target market *needs* conversion help; CRO is a high-priced service; you can do the strategy, implementation, and training required to get it done; and CRO lends itself to value-based pricing as you build your track record in the niche.
You'll have an easier time if you become known as a specialist for "bloggers who want to convert traffic to revenue" or "agencies who need to convert website visitors into leads."
You can always add other services in the future, but start with something where you can make a big impact with your existing skillset and where a market need already exists.
Good luck! Glad to do a Clarity call to answer any followup questions; I've advised agencies in 15 countries.