How to price your services correctly

Hey,

The workshop is in two days. This email will be one of the last chances to grab a seat.

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If you do one thing today before the workshop, make it this.

It'll take you sixty seconds and it might change how you think about your pricing for the rest of the year…

I rarely see agency owners price their services correctly. Most are leaving money on the table and have no idea, because they've never looked at the two numbers that would tell them instantly.

It's called the 30/30 rule.

Number one: your close rate. What percentage of proposals do you close?

If you're above 30% - like 40%, 50%, 60% - you're priced too low. I know that sounds backwards. A high close rate feels good. It feels like you're winning. But what it's telling you is that the market can support a higher price and you're not charging it. You're leaving profit on the table with every single deal you sign because almost nobody is saying no. When almost nobody says no, it means you haven't found the ceiling yet.

The sweet spot is 28-35%. That's where the market is telling you that your price is right at the edge of what buyers will pay - high enough to maximize revenue per deal, low enough to still close consistently. If you're at 55%, you could probably raise your prices meaningfully and still close plenty of business. You'd just close fewer deals at a much higher margin, which is almost always a better trade.

Number two: your delivery cost. Take the direct cost to deliver your service - people and tools, nothing else - and express it as a percentage of revenue.

If that number is above 30%, you don't have room to scale.

At full scale, an agency's cost structure breaks down roughly like this: 30% goes to direct delivery, 15% goes to admin, management, and non-billable overhead, and 20-25% goes to SG&A - your marketing, your rent, your software, all the stuff that keeps the lights on. That leaves 30%+ profit.

But if your delivery cost is sitting at 45% or 50% right now, the moment you try to scale - the moment you add managers, add structure, add the operational layer that growth requires - your margin vanishes. There's no room for it. This is the trap that catches so many agencies between $1M and $3M. Revenue goes up, they hire to support the growth, and profit either stays flat or shrinks. They assume it's a cost problem or a sales problem. It's a pricing problem that was baked in from the beginning.

The math on what to do is straightforward once you know both numbers.

Close rate above 30% with delivery cost under 30%? Raise your prices until your close rate drops to that 28-35% range. You're undercharging and the market is screaming it at you through your close rate.

Close rate below 30% with delivery cost below 30%? You might need to lower your price slightly until delivery cost hits 30-35%. You're priced out of the market but your operations are efficient enough to absorb a lower price point while maintaining healthy margins.

Close rate below 30% and delivery cost above 30%? That's the hardest position. You can't demonstrate enough value to justify your current price, and your cost structure doesn't give you room to drop it. The fix is proof. Fix your case studies. Fix your sales collateral. Build the evidence that justifies the premium before you touch the price.

I've talked to over 200 agencies at this point. A lot of them are undercharging and missing out on profit they could have tomorrow if they just ran these two numbers and made the obvious adjustment.

Calculate both this week. Takes about five minutes with a calculator and your last few months of proposals and P&L. Your bottom line will thank you.

In two days I'm going way deeper on this and my full system around it - how I find where profit is hiding, how I increase team capacity when everyone says they're full, which clients I upsell and which I fire, and how I build the dashboards that let me run my agency on data instead of guesswork.

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If you've been on the fence about this one, get off the fence.

The people who show up to these things walk away with something they can use immediately.

The people who tell themselves they'll "catch the recording later" almost never do.

Nick