Points pricing vs hours - What's the difference?

How do you price an inbound marketing campaign?

If we had a pound for every time someone asked us how much inbound marketing, web design or video sales cost we'd still be doing what we're doing (because we love what we do) but we'd all probably live in way bigger houses.

But it's a fair question.

Marketing budgets aren't infinite and you have to get the best ROI out of the money you spend.

If you're coming to an agency, you're likely going to be faced with two pricing models.

One will deal with points, and the other will be pounds per hour (or possibly based on set deliverables).

*For full disclosure, we operate under a points based pricing model because we've found it works best for us and our clients, and gives us the flexibility to deliver results.

Why points based? And what is it?

Points pricing is based much more on value and results.

In a point model, a point is allocated to the cost of a particular service or piece of work. So, for instance, £120 would equal one point.

Within the agency’s services, each tactic or activity will be allocated a points value. For examples an individual blog might be worth four points, while an eBook could be 15.

Points are allocated based on the value and effort it would take to complete the given task. So a blog would be worth less points than a full marketing strategy.

In the above example, within the points system you’d have to spend £480 to get enough points to buy a blog while an eBook would be £1,800. The time it takes then becomes the responsibility of the agency to complete the task efficiently while maintaining high standards.

Using points makes costings more transparent and easy for the client to understand. Your monthly budget just translates into a number of available points for that month.

For example, a £5,000 a month retainer would translate to 41 points a month. What those points are allocated to is based on your objectives and goals.

Flexibility built in

So let’s say for instance your goal is to grow your website audience.

If you have a campaign based on hours or deliverables you might spend (depending on the agency’s cost per hour or deliverable) £2,000 for four blogs (one a month), £6,000 for an eBook or downloadable guide, and another £1,500 for 15 hours of social media support to promote the content.

If everything goes well, you know you’ve spent £9,500 on deliverables that you’ve received and you can report on the results to judge your ROI.

But what if something changes? Or what if something isn’t working well, or part of your campaign proves more successful than another and you want to allocate more budget to it?

If you’ve gone down the deliverables route, it’s much harder to be flexible because you’ve paid for specific things.

However, if you’ve bought an allocation of points it is much easier to build in flexibility as you can just reallocate those points to a different activity based on how your campaign is performing, or how your business’ goals change.

And because points are more transparent, it saves you having an awkward conversation when the agency comes back because the activity took longer than they’d thought and they get onto the topic of over-servicing based on time reports.

A points based campaign

So let’s look at a typical three month campaign and how you could break it down using points.

As we’ve said, if this is our initial engagement, we’d always recommend going through the Foundation Workshop as this is what puts us on the same page, gives us the chance to understand your goals and objectives and make sure the plan we create meets your needs.

After that workshop, let’s say your retainer is £5,000.

Within the campaign, you'll need to allocate your points to certain services. We typically break them down into three pillars (and you'll need something out of each pillar to build a successful campaign).

* Tactics are broken down by Inbound Marketing tactics, Digital Strategy and Account Management

Then we help build your campaign based on the amount of points you buy incorporating:

- Strategy (to make sure we're aligned with your objectives)

- Tactics (to meet the goals of the strategy)

- Management (to report on results and manage activity)

Then, as your monthly points allocation is increased based on the retainer, the amount of activity increases in line with the activity which will meet your overall objectives.

If anything changes, provided there are enough points available, the activity can be quickly adapted without any additional budget conversations or delays while new proposals or invoices or drawn up and signed.

The campaign stays on track, and you've still got oversight over what you've spent, how many points you've used (and on what) and how many you have left.

Given how quickly things can change, and how rapidly a campaign's objectives can be altered to meet new demands or market movements, a points based campaign could be a much better option.

Choosing a pricing model that works for you

Whichever pricing model your prospective agency uses, it's important that you go down the route that works best for you.

Transparency is key and it should be easy for you to understand exactly what you're getting for the money you pay, and be able to assess ROI based on the results you see.

It's a big decision to outsource parts, or all, of your marketing to an agency and how they are spending your budget is something you should be totally clear on so you can explain it to your bosses when budgets come up.

If you're not clear on how the pricing works (are you being charged for quick 15 minute update calls or for simple tasks you could do yourself for instance?) then ask questions. If you're not happy with the answer, keep asking questions and look around until you find an agency that can match your needs.

Particularly today, agencies should be basing their pricing on the value they bring to the table and the results they can get for you, rather than the number of hours they can allocate to your account or the number of deliverables they can point to at the end of a quarter.

Speaking of value. Have you wondered how much value you're getting out of your current marketing activity? We've created a free comparison tool which will give you an idea of the success of your current activity.

Have a go by clicking below to get a free audit of your marketing.