The formula for pricing any service is quite clear: you need to know how much goes in and how much comes out of your pocket to provide the service. Let’s start with the most important rule before sending an official price quote / closing a deal: setting expectations with the prospective client. The client needs to understand exactly what they are paying for and what services they will receive for the requested cost.
Aligning Expectations
It is important to ask the client how the success of your work is measured through their eyes and guide them toward a quantitative measurement of your performance. For example: monthly volume of leads, cost per lead, cost per click, volume of traffic, search volume, conversion rates they would like to achieve each month, etc.
Unlike traditional media advertising, digital advertising allows us to measure the effectiveness of every sum we invest in media; therefore, without such alignment of expectations, it is likely that the engagement will not last and the collaboration will create frustration between both parties in the agreement.
Setting Targets and Goals with the Client
You must define a numerical target for desired results together with the client before beginning work, against a pre-defined media budget, and set organized targets, goals, and KPIs with the client. It is necessary to understand the client’s expectations and check whether their expectations are realistic and whether they understand the landscape in terms of costs versus results. For example: a real estate lead will not cost 5 NIS, a lead for a SaaS product that costs thousands of dollars will not cost tens of shekels, and an online store will not immediately achieve a 1:7 ROAS (Return on Ad Spend).
Only after we have set expectations with the client regarding these areas, evaluated together with them the results they can achieve based on their planned media investment budget, and conducted this alignment in the introductory meeting/call, should you prepare a price quote for the client and send it as quickly as possible. It is important that all terms of the agreement are clear and detailed.
So How Do You Build a Price Quote?
Be sure to prepare a detailed price quote and write a clear explanation of all the services you provide. It is recommended to prepare a standard proposal template that will serve as a baseline for any new proposal you send out. The proposal should ideally be modular and present the variety of services you offer – this gives the client choices and allows them to purchase additional services from you, while ensuring prices for each service are clear and presented separately from the monthly retainer. It is advisable to divide the proposal into one-time costs and monthly costs.
Set Up Costs
Setup costs are essentially the campaign setup on each platform you choose to work on – a one-time fee for initial audience building, keyword and phrase research, pixel auditing, and initial setup of all campaign infrastructure. All of this will be performed in the client’s ad accounts, making your work an asset of the client for all intents and purposes. It is recommended to price a one-time setup fee between 500–1,500 NIS per platform, depending on the platform’s size and the targeting options available in its ad system. For example: setting up a campaign on Outbrain/Taboola platforms will cost 500 NIS, whereas setting up a campaign on larger and more complex platforms like Google/Facebook will cost around 1,500 NIS.
Monthly Management Fees
In the section detailing ongoing campaign management services – explain the services you provide within the monthly retainer as extensively as possible to avoid misunderstandings regarding what your service includes. Pricing can be structured in one of two ways:
1) A fixed monthly fee model.
2) A monthly fee model calculated as a percentage of the monthly media spend.
It is recommended to choose the second model – management fees derived from the monthly media spend, as this is a model that serves the mutual interest of both parties in the agreement, since every client looks forward to a long journey with the chosen vendor, and vice versa. If good work is done by the vendor and the client profits from the advertising, they will be willing to increase budgets, and the vendor’s management fees will grow accordingly. However, since we do not live in a utopian world, there may be cases where advertising budgets are very low, and the vendor’s profit share derived from these budgets will be correspondingly low while the amount of work does not necessarily decrease. Therefore, it is recommended to protect yourself by also defining a minimum fixed amount that will be profitable for your work as a monthly management fee. This will motivate clients for a long-term partnership and also guarantee your monthly income for your work.
The standard market commission for campaign management fees ranges between 15%-20%, and the minimum management fee ranges from around 1,000 NIS for a beginner provider up to 3,500 NIS for a larger, more experienced agency. The payment is for management fees only and does not include the media spend.
Naturally, as the client increases the advertising budget, the derived commission percentage should decrease in tiers determined in advance, as is customary in the market:
- For an advertising budget of up to 50,000 NIS, the management fee will be 20% of the monthly media budget.
- For an advertising budget over 50,000 NIS, the management fee will be 15% of the monthly media budget.
- If you have clients who invest massive amounts in media, it is customary to go down to 12%, because although you earn more with such budgets, these are complex campaigns that require much more work time than usual.
Page Content Management Service – Pricing for this should appear in the monthly costs section of the proposal. Standard market prices range between 2,500–5,500 NIS per month for writing a monthly content calendar per platform (Facebook/Instagram/LinkedIn). The price naturally depends on the content domain and the required number of posts per month. You must confirm needs with the client, and if they also require customer service on the page and responding to comments – an additional cost should be charged based on the required availability and the volume of comments that need answering.
If you provide the client with both ongoing campaign management and page content management services, it is customary to charge only the percentage fee on media spend for campaign management and not restrict this service with a minimum retainer, as there is already one fixed retainer being paid by the client for page content management.
Studio and Graphic Design Services
If you also provide graphic design services – make sure to work with your clients using an organized design brief that will reflect the client’s expectations (click here to download the brief). This will help you hit the client’s goals as quickly as possible, thereby minimizing revision rounds until final approval. You should add a section to the price quote with a fixed graphic design price list – the price list will show the design cost for a first concept ad to serve as a master, followed by pricing for adaptations of additional ads derived from it based on the same concept (fixed grid).
- For preparing a master ad – the standard market price ranges around 300–500 NIS
- For each additional ad based on the same concept, the standard market price ranges between 100–200 NIS
- Of course, you can also work on an hourly model – the standard market rate for an hour of studio work ranges around 150–350 NIS
- When pricing a landing page – it is very important to understand the client’s needs in advance prior to pricing (e.g., do they expect a long/short landing page?). It is important that they send clear references so you can understand what the client expects to receive and whether that is also what they need according to your professional opinion. Only after understanding the precise needs and desires of the client should you estimate the amount of time and work required of you and price accordingly.
It is recommended that all prices include only one round of revisions. Limit the number of free revision rounds to prevent endless delays before the final asset is approved. Once you price additional revision rounds at an extra cost based on your hourly rate, the client will automatically be less trigger-happy, and the number of revision rounds will drop to the minimum possible until final approval.
Add General Terms to Your Proposal
- Define clear payment terms and payment methods.
- Always take a credit card / checks as a deposit.
- Emphasize that media payments are made directly to the media platform and are separate from the ongoing monthly management fee.
- Add an advance notice condition for terminating the agreement by either party of at least 30 days.
- Maintain transparency with the client – work will be carried out in ad accounts owned by the client using the client’s credit card.
- Performance reports – define the format and method of delivering performance reports as well as their frequency. Be sure to note that any additional request for reports beyond what is defined in the agreement will incur an extra fee.
- Define a minimum commitment period for working together – sometimes results take time and arrive at a later stage of work; make sure to communicate this to the client and define an agreement commitment period of at least two to three months.
- It is recommended to ask for a certain down payment before starting work, which will be credited towards the first monthly payment.
- Set organized working hours according to office hours. For example: Sun-Thu 9:00 AM – 6:00 PM.
- Define the communication workflow with you – any communication regarding tasks to be performed must be received via organized email and not via WhatsApp and/or SMS and/or phone – it is important that you have email documentation and tracking for all ongoing operations and records for all approvals received from the client.
- It is recommended to add an expiration date to the proposal, as your prices may change depending on the period.
- Specify that any additional service not defined or detailed in this proposal will be priced separately.
Summary
Time equals money. If, after signing an agreement and beginning collaboration with a client, you are required to provide additional services beyond what is stated in the work contract (such as website/landing page enhancements, requests for special designs, extra reports, etc.), review the scope thoroughly before executing the work, estimate the required volume and time, and price accordingly while fully managing expectations with the client prior to starting work regarding the deliverables they will receive for their money.
Remember not to start working before the price quote is signed and approved by the client, and always maintain a high, professional standard of service and complete transparency with your clients.
About the Author:
Hadar Geva, Business Development Manager at “Fialkov Digital”, is responsible for business development, partnerships, and acquiring new clients for the company.
