Good news for marketing agencies: social media spending is on the rise and is expected to double over the next three years. In fact, social media is set to be the fastest-growing channel now thru 2024. According to forecast reports, social media ad spending will overtake television advertising at US $177bn this year.
Competition drives ad spending. Even mega giants Facebook and Instagram are losing part of their monopoly to Gen-Z dominated channels like Tiktok. Users dictate the social media channels, the channels dictate the star content, and the brands insert themselves in as naturally as possible. It’s an evolving cycle of content production and consumption.
Somewhere in between though, there needs to be careful analysis and planning: social media strategy. In a sea of metrics and noise, brands risk drowning without professional help. That’s when they call you. As a marketing agency, you need to have a plan and quickly deliver on it.
With social commerce on the rise, social media marketing metrics are more than just how many likes and shares a post gets. Clients want to know how their social channels are contributing to their bottom line, making social media management infinitely more valuable than it was 5 years ago.
This article will boil down key considerations to making a pricing framework for agencies and how to use data-based social media reporting to keep clients informed, satisfied, and loyal.
It’s time to upsell existing social media clients and land new ones.
Dust off your clients’ social media accounts, and get on those trends. Your clients’ brands need to be in front of their audiences more than ever before. Social media marketing plays a large role in your clients’ business, and agencies should treat social media as a channel for significant business growth: 55% of consumers learn about new brands on social and 74% of consumers rely on social media to guide their purchasing decisions.
Based on what we have seen from the social media specialist agencies that use our reporting platform, fees range from $1,500 to $25,000 per month. So how do agencies decide what to charge for social media management? How can social media analytics help agencies retain key accounts, upsell clients, and land new clients?
For starters, expect a bigger budget in the social media pot compared to previous years. To best position your clients’ brands front and center and not risk losing out to the competition, your clients should treat their social media strategy as a channel for significant business growth.
What about the small businesses that spend less than $10,000 a year on digital marketing, you ask?
Get bigger clients.
Just kidding! Regardless of the size of your clients’ business, social media management is a conversation you should be revisiting with all your clients. A recent study revealed that small businesses are also hopping on the social bandwagon:
96% of small businesses say they use social media in their marketing strategy
41% of local businesses depend on social media to drive revenue
72% of executives surveyed say that social data is already the top data source used to inform business decisions, even more so than market research
Now that’s a lot to unpack.
Agencies have more and more channels to manage, adding on more billable work hours. To avoid awkward conversations with clients, how can agencies ensure their pricing plans clearly reflect the work expected while allowing room for flexibility in relation to the scope of their project?
💡Agency Tip: As an agency, getting clients on newer platforms as early adopters gives clients a competitive edge and more chances to succeed organically before algorithms shift towards paid views. Kind of like the good old days of Instagram.
Deciding how to set your pricing is often a key differentiator between running a scalable marketing agency and one that is wasting time with back-and-forth phone calls and unsatisfied client experiences.
Below we’ll discuss how various agencies price social media management, offer an alternative and see which one fits your agency best.
The Vanilla of Social Media Management Pricing
These are the classic pricing models. They are usually the preferred route, singular, simply defined, yet limited within their reach.
If pricing models were a personality, which one would you be?
1. The Hourly Model: You like to live in the moment.
Charging clients by the hour is the simplest, and most straightforward pricing model for agencies. It works if you have just a handful of clients, but it’s hard to scale since your time is directly tied to earning potential.
Brian Robben, CEO of Robben Media, said it best:
“Hourly is the easiest contract to sign, takes the least marketing skill, and the work stops immediately when you're off the clock. It's far less stressful. And you're held less responsible for results. However, you're often competing against freelancers, some who are overseas, and some are desperate for any work. The pricing can be a race to the bottom to win a contract.”
2. The Fixed Fee / Retainer Model: You like repeatable income.
This one already offers more scalability in that you know your agency’s MRR (Monthly Recurring Revenue). It’s paid upfront for a predetermined amount of time or deliverables.
Having a retainer fee is often harder with clients you’ve never worked with before. This is why some agencies opt for an hourly or project-based model to prove their worth before moving onto a retainer model where they can keep improving upon their social media benchmarks.
3. The Performance-Based Fee: You’re religious about the algorithm and believe it will deliver unto you.
This model is heavily based on measurable social media performance metrics, and can work for clients looking to get a direct revenue impact from their social media. Your agency will need to set clear expectations on:
The $ value of each conversion
How they will be tracked and shared (our social media analytics dashboard makes it easy)
The performance payout timeline (in social media, it takes around 3 months to see results)
This type of pricing model often implies some upfront payment to cover your agency’s main costs, plus a performance fee once your agency delivers successful results.
4. The Project-Based Arrangement: The one-and-done of client relationships.
This is a very common pricing model for agencies because it’s not time-based and scalable. Agencies usually calculate their fee by considering:
Estimated total labor hours
Adding a profit margin
Opt for this model if there are no unexpected variables that can end up taking up more agency time.
5. The Value-Based Model: You get what you deserve.
This is arguably the most scalable pricing model. Similar to the Performance-Based Fee noted above, it has no upfront fee and runs a higher risk if you don’t deliver on your promise. If you can demonstrate to your clients that your social media services brought X amount of $ in sales straight from their Instagram, for instance, then this is a very lucrative pricing model and a fair one, too, as your clients are getting their money’s worth.
6. The Equity Pricing Model: You want a piece of the upside.
This is if a potential client reaches out to you without the necessary funds upfront to cover your fee, but the project has the potential to generate cash flow. You believe in that potential. Call it optimism. Let’s say your agency set up a Shopify store for an amazing product, and managed an Instagram page to drive visitors to the site. A portion of the sales would then go to your agency for its services.
7. The Personalized Pricing Package: You understand the intricacies of life and let it translate into your work.
Social media management is tricky and involves multiple channels, content types, and algorithms to impress. When coming up with pricing plans, perhaps the trick is not just customization, but personalization.
Customizations are decisions that agencies make for clients. You could combine a low retainer with equity-based pricing, based on the client and your agency’s track record. But it also implies a lot of ad hoc decision-making. Personalization, on the other hand, means your clients can select their preferences for themselves. Kind of like Netflix.
The Netflix of Pricing: Marketing Agencies are Opting for A DIY Pricing Framework
Creating a clear pricing framework allows your agency clients to pick from a set of existing plans and add-ons to select the best fit for their budget and needs. Hello, scalability!
Here are some examples of agencies being completely transparent and clearly displaying their tiered pricing right up there for potential clients to see:
Example 1: WebFX
WebFx is a digital marketing agency that has a predefined pricing framework for each of their digital marketing services. For social media management services, they’ve divided it into three tiers by:
Number of social media networks
Number of social posts per month (minimum 1 a day, to twice daily)
Number of boosted posts
Frequency of comment monitoring (from 3x per week, to daily)
Being transparent about your pricing can help potential clients pick you, as fear of hidden fees is often what holds them back.
Example 2: SociNova
Another great example is SociNova, a social media marketing agency with 4 pricing packages. They specifically list what their clients can expect, and ensure them that there are no unpleasant surprises come billing time.
Having a clearly defined pricing framework helps your agency build a good client relationship from the get-go. And just like any relationship, it is built upon clear communication, trust, and performance-based metrics. PBMs are key to charging your clients what your agency services are worth.
Live Social Media Analytics Dashboards Build Client Trust
It’s crucial for marketing agencies to clearly show the value of their services to differentiate themselves from the plethora of social media agencies offering similar services. But when social media KPIs like brand awareness and lead generation are harder to quantify, how can your agency prove its success? Enter, the social media analytics dashboard.
Social media analytics dashboards display your clients’ metrics in real-time and give them access with a separate dashboard login so they can view their results at any time. This is what’s going to be key in proving the value of your agency’s services and giving you the right benchmarks to improve upon month on month. It also helps your agency justify the amount of money spent competing for ad space on social media.
With a live dashboard that displays all your clients’ social media stats from all their channels in one place, your team can easily track what channels are contributing to the bigger picture. Connect the dots between web traffic, and eCommerce sales, all the way down to their bottom line to justify increases in spending or add-on services.
Highlight Your Value With Automated Social Media Reporting
No social media platform’s analytics can give you the big picture. That’s where white labeled social media dashboards come in. It’s essential your agency gathers all its clients’ key social media metrics to show that they’re delivering on their promises. And on time.
Easily drag and drop items from your social media dashboard then schedule your social media reports to go out daily, weekly, or monthly, and sit back as it does the work for you. Add annotations and text where you want to highlight key results on your clients’ and personalize their reports, and let AgencyAnalytics take care of the rest.
Not worrying about creating your client reports each time allows your marketing team to do other higher-level tasks that will bring success to your clients. With automated reporting, you have the exact data to keep a proven track record to onboard new clients with confidence. Upsell your existing clients with new value propositions by gaining their trust and positioning their ROI at the forefront.
Source: Social Media Report Template
Create custom reports to include clients’ Instagram metrics, Shopify data, and Google Analytics all in one place. Choose between various types of graphs and bar charts, to represent your data visually so you can quickly spot trends. The combinations are limitless to get the right message across to your clients.
Summary: How Much to Charge for Social Media Management?
Marketing agencies should be dedicating at least part of their clients’ marketing strategies towards social media management – or expanding their efforts. If you’re trying to upsell clients on more social media services, or onboarding new clients altogether, you’ll need to consider the industry standards in 2022 and how much your agency should charge for social media.
There is no one size fits all answer to the question: “How much should an agency charge for social media management?” As a marketing agency, you need to take many factors into account when choosing the right pricing plan, leaving your clients feeling like they’re getting their money’s worth without underselling your skills.
Social media is a beast with many heads, and each needs to be tackled differently. Not to mention, every client has different needs, goals, and budgets. Creating an adaptable framework for social media management pricing helps you onboard new clients and scale your agency. Backing up your work by clearly communicating your clients’ performance-based metrics helps you retain them.
Scalable social media marketing tools like automated marketing reports and having a customizable and transparent pricing plan allows your agency to onboard, upsell, and scale in no time.
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