Marketing January 8, 2015 Last updated September 19th, 2018 245 Reads share

Why $500 A Month Is The Wrong Amount To Charge A Client

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A friend of mine is trying to negotiate with a new prospective client. He’s excited to get the business and is eager to cut his prices immediately.

“Well, what if I offer him a price of $200 a month to run his Facebook ads?” he muses. “What if I offered you $100 to give me a ride. Would you do it?” is my response. “Depends if it’s a mile down the road or if I’m asking you to drive halfway across the country.”

Likewise, you can’t just quote a price, sight unseen, if you’re running a hospital. Can you imagine how ludicrous it would be to arbitrarily charge $500 to everyone who comes into the emergency room? Even worse would be to give every patient, from gunshot wound to appendicitis, the exact same treatment, too. So until you get a chance to collect some vitals, you’ll not be able to make a proper diagnosis and then recommend a treatment.

Metrics, Analysis, Action

We call this “MAA” in marketing, short for

If you’re a consultant or in-house marketer and you don’t follow MAA, you’re a witch doctor, however well-meaning.
And even if you’re able to heal the patient, that $500 you charge could be on an hour of work or 100 hours of work.
The former is worth $500/hour and the latter is worth $5/hour.

This is independent of whether the client is a freetard (a tire kicker who wants to negotiate you down) or someone with unreasonable expectations. You just won’t know until you get a chance to assess their goals, see if they have content that converts, and have enough money/resources to make it worthwhile for you.

Goals, Content, Targeting

You’ll have to apply GCT (Goals, Content, Targeting) to determine if they’re a fit for you.

In other words:

  • Goals: what is the cost per lead or cost per sale that they need to have to be profitable? Don’t know or don’t have goals at each point in the funnel? Then you can’t start. Else later they’ll arbitrarily be able to say you didn’t deliver.  If you don’t have existing historical performance or if they’re a start-up, you can’t really make promises at any price.
  • Content: Do they have existing landing pages that already convert? If not, then the risk is all on you, unless the client is in a category you’ve done before – personal injury attorneys, dentists, or other local categories you can clone. Hint: they need to produce the content, not you – to collect the customer testimonials, videos explaining what they do, landing pages that convince people to buy, ad creatives, etc… If you happen to be a designer or creative agency, then think hard about what you need from them to make this work.
  • Targeting: How big is their email list? How much traffic comes to their website already? How much social traffic do they get, paid or not?  Can you get a retargeting pixel in place to run Facebook and Google custom audiences?

You’ll need to run them through this analysis before you can officially put together a project plan.

We call this a “set-up checklist” or “plumbing” items. It’s basically a marketing x-ray, if you will, to see how much risk there is. We, of course, don’t want to take on a client where they don’t have a healthy enough business to afford our program, can’t produce content, or have unreasonable expectations.

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This all pre-assumes that they’re pleasant people to work with. If not, they’re not worth it at any cost. They will be a nightmare client complaining, nickel-and-diming you, and driving your people nuts.

Free consulting up front? No!

“But they said they’re willing to spend money if you can guarantee results and have a solid plan for them”, you exclaim. So you’d just need to do a bunch of free consulting work up front, and then they’ll decide.

Imagine you wanted to build your custom dream house. Instead of going to a few local architects and builders in town, you go to the 3 most famous architects in the world. And you tell them, “Hey, why don’t you design a house that I’ll like, and if I choose you, then I’ll pay you a fee that I think is appropriate.

You’ll have to do the consulting and design work for free up-front, since you say you’re good, right? You wouldn’t get very far, and neither will a wanna-be client, however well-meaning, with you, if they don’t respect your time.

If you’re desperate for business, you could offer this as part of a free consultation. But otherwise, just say that you charge a token analysis fee of $1,000 to be able to properly assess goals, content, and targeting – to know what will work.

Choose whatever number makes sense for you and fits with the size client you normally work with. It should generally be half of what your monthly retainer would be. Even a few hundred dollars is enough to qualify them.

If you’re doing a good job in inbound marketing (also known as content marketing or word of mouth marketing), then they came to you.

And that means they know what you do and who you are, so you don’t have to spend the time to explain all that.

And if they don’t qualify to work with you, kindly send them to a list of your competitors – they’ll appreciate that!

Getting a few token dollars from a client doesn’t preclude you from charging Fortune 100 fees later. If anything, think of it like paid prospecting, where they’re paying you to list out all the things you’d fix and assemble it into a plan for them.

The tally of items after you’re done could be a LOT more than you would originally have quoted. And they might be a client willing to spend a LOT more money than you anticipated – so hard to tell until you really get in there.

Likewise, the folks who sound promising might have wasted your time, but this qualifying technique minimizes your risk here.

Are you using GCT (Goals, Content, Targeting), MAA (Metrics, Analysis, Action) and token analysis fees to screen the right clients for your business?

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Dennis Yu

Dennis Yu

Dennis Yu is the CTO of BlitzMetrics. He is an internationally recognized lecturer in Facebook marketing, having been featured in The Wall Street Journal, New York Times, LA Times, National Public Radio, TechCrunch, Fox News, and CBS Evening News. He is also an author at Adweek's SocialTimes column. Dennis has held leadership positions at Yahoo! and American Airlines. He studied Finance and Economics from Southern Methodist University and London School of Economics. Besides being a Facebook data and ad geek, you can find him eating chicken wings or playing Ultimate Frisbee in a city near you. You can contact him at dennis@blitzmetrics.com, his blog, or on Facebook.

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