Are you under selling?

A repetitive theme that I’ve been running into as of late is pricing.

I keep finding instances of people pricing too low versus market. And this means your agency isn’t making as much as it should be.

I’m Nick Avaria, agency owner, and founder of Agency Acquisitions. Every week I share a client story, insights, and tips into scaling your agency faster, in 300 words or less. I’m ramping up my new Instagram account with daily videos and insights. Hit follow for daily insights on running an 8-figure agency.

Pricing is a hard to thing to get right because of so many factors:

1. What competitors are charging 

2. Your sales process

3. Your target markets ability to pay

4. Your brand

5. How good your service is

6. Rarity/uniqueness of your service

7. Etc.

We could go on and on about all these factors because they all matter.

But in my opinion there’s a simpler, more practical way. 

Pricing should have 2 key factors - I call it the 30-30 Rule:

1. Can you deliver the service for 30% or less direct cost (cost of the people and tools required)

2. A close rate of above 30%

This isn't overly scientific. But it lets you know if you’re on the right track. 

If you are NOT on the right track you need to do the full deep dive and do an analysis of all the factors.

But in my agencies I’ve always used the 30-30 rule.

When I encounter agencies closing 40, 50, or even at 60% of proposals closed - I know they are leaving money on the table. 

Recently I had an agency client leave so much money on the table that we took them from charging $125 per hour to $200 per hour for the exact same services. 

The close rate before and after the price increase went from 80%+ to 50%. Meaning we still have more room to put prices up.

But even this change so far will mean the difference between making 10% profit to 35%+ while giving all the staff pay increases. 

Again remember, the 30-30 rule is really simple. The underlying factors are complex. 

Let me know if your close rate is too high when using this rule.

In the next newsletter I’ll let you know what to do when the close rate is too low, while the direct cost is too high.

Want the video recap on the 4-part series on scaling your agency to $10M+? 

Watch my latest Youtube video here where I break down the exact steps:

Ready to stop wasting time and start scaling your agency to 7 or 8 figures? Book a time with me this week to find out how to get started.

Nick