What is the right price for this service?
 

Hello everybody,

Thank you in advance for your opinion.

I've developed a little marketing tool that is proven
to deliver for my existing clients, roughly between $5,000 and $10,000
a month in revenues.

My direct costs are under $700. Right now I'm charging only 30% as
an "agency fee" So the bill for my clients is $1,000, $700 for marketing and $300 for me.

Now I want to add more accounts and I'd need to hire
a sales rep. But I have no margin...

Would you ask $ as one time sign up fee? How much?
Would you ask $500 or more as a consulting fee?
What do you perceive to be the value of $5K to 10K a month,

I offer no guarantees, the outcome is stable but not guaranteed.

What do you think?

Thanks

Frank

Re: What is the right price for this service?
 

Hi Frank,

I don't know what profit margin your customers are making on the revenue, but I think that's important. (Profit margins on different products and services can be as low as 1%, to almost 100% - so there's a big range!)

The reason why I think it's good to know that is then you have an idea of how much the customer would be willing to pay. Of course, they'll stop paying if they don't make a profit - so if their profit margin is very low, there may not be much room to move on your prices and still have customers. But if their profit margin is very high, you can probably charge more, and most customers will still stay...

Personally, I would probably charge a higher rate rather than a one-time sign-up fee, since the sign-up fee might stop people from "trying" out your marketing tool in the first place - but it also depends what your competitors (if any) are doing... You really have to assess these things in the light of your competitive environment.

Sorry if that sounds "wishy-washy" but I think it's hard to give a good answer without knowing more about it... :)

Best wishes,

Dien

Re: What is the right price for this service?
 

Frank,

When you say marketing tool, even a self developed marketing tool, I suspect you meet some resistance. We've all heard the words "marketing tool" before.

I don't want to know any trade secrets but what are you talking about when you say "marketing tool"? That may be the key to your fee structure. If I'm a potential customer, I'd like to know more about your "marketing tool". I'd like to know more because you ain't the first guy to walk through the door with a "marketing tool".

Like Dien says, my profit margin will vary per item so if I have a grasp on your concept I might be willing to pay a higher fee or charge from the one you quoted in your post.

Again, don't want any trade secrets just want a general idea.

Tom

Re: What is the right price for this service?
 

I promote legal services, so the margin per new client
is more than $1,000.

My program is not new or unusual, it is just more focused
and because of my years of experience, I can offer a reduction
in their advertising expenses of up to 50%, and still manage to get
a nice flow of new clients. Like I said, $5,000 - $10,000 a month.

The challenge for me is about growth. I have no margin
for sales reps. and that's the critical step for me to take
if I want to handle more accounts.

Thanks,

Frank

Re: What is the right price for this service?
 

I've started and ran many businesses over the years and my "pricing Formula" was always to charge 3 times what my cost was.

If an Alarm Installation cost me $1000 (labor & materials)....I charged at least $3,000 to the client.

With my present "Video Marketing" program I usually charge $1000 to $2,000/mo to attorneys and assisted living clients AND....my costs are probably about $50/mo.....tossing backlinks at the Keyword Videos to keep them ranked on Page One.

I base my current fees on "what's the VALUE to my client!

If I can bring an attorney or senior facility one client a month....they are happy.

If I have to pay $700 to make $300....I would probably not even begin a project like that. Whomever is receiving the $700 is probably making more money than I am and.....I don't like making "providers"...rich.

So....my advice to you is.....
1) Raise your fee (heck....one client brings an attorney $8,000 to $15,000 or more. And an Assisted Living client brings $2,500/mo X 12 mos = $30,000 for ONE Year!)

2) Find a lower cost service. I don't know what you're paying for but there's got to be a cheaper was to do it.

If you like working with attorneys, check out a guy named Derrel Eves. He does Video Marketing for Attorneys and other "Affluent" accounts.

Don Alm

Re: What is the right price for this service?
 

Don,

You're right. It is about the value to my clients.
I'll work on that. thank you very much...

Frank

Re: What is the right price for this service?
 

Frank,

Don certainly gave you an excellent perspective. Value to the client is very important. I don't know if 3X your cost will work for you so maybe you can change that to 3 keystone.

Take the cost of your service, say $100 and double it to $200. Now double that 200 to 400 then double that 400 to 800. So that means you charge your client 800. That might be more realistic in or in line with your services.

Either way it seems to me you are getting paid for the value you provide to your client. Having said all that, none of us really know if there is another way to spin your situation. Only you will be able to determine that.