Jan 29, 2019
Are you pricing your agency projects all wrong? Do you have the right person in charge of estimating your agency projects? If your agency is bringing in a ton of sales and a lot of new accounts but you aren't making more money then this episode is for you.
Are you lacking cash flow despite an upswing in your business? Is your net profit low despite the fact that you're landing new business? Don't worry - it's a common problem, so you aren't alone! Here's what you can do about it...
The real problem isn't actually the sales, it's the person who's doing the pricing. In A LOT of cases, it's usually the agency owner who's setting the pricing. They go and do all the selling and set the pricing but then aren't actually really involved in the delivery. So, there's a disconnect between the pricing and what's really involved in the delivery. You see where I'm going here? :)
So, if you're pulling the pricing out of thin air then you're going to lose money on most of your projects. You need to look at the math and you need to have someone who's objective to sales and delivery set the pricing.
So, here's how you can use the numbers to make sure your projects are more profitable.
1. You should already be tracking everyone's hours from FTE's to contractors.
2. Have your Ops Manager or CFO be the one who manages pricing. They're the ones that understand the frontlines and the ins and outs of sales.
3. After 3-6 months of analysis, you'll be able to determine whether it's a pricing issue (you're not charging enough) or a delivery issue (your team is spending too many hours and over delivering)
4. In many cases, it's a pricing issue. That's when you want to put your Ops Manager or CFO in charge of pricing and ** incentivize ** them for hitting certain profit margins. That way, they're going to charge aggressive prices and make sure that people are hitting their hours.
Here's another thing to bear in mind as we enter into the new year. Think about your profit margin goals for this year. Then think about the team you have to have in place in order to achieve those goals? Now when you're planning for your goals and you're adding up all those new sales, remember your overhead is going to increase too by adding more employees. Calculate these added expenses when you're planning your profit margin goals that way you aren't caught off guard and get disappointed.
Two Ways to Be More Profitable-- https://youtu.be/Jz1rzdbtZf4
Please comment below and let me know what challenges and struggles you're facing. Maybe we'll feature your questions on one of our shows.
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JASON SWENK IS AN AGENCY ADVISOR THAT GUIDES MARKETING AGENCIES THROUGH A PROVEN FRAMEWORK FOR GROWING THEIR AGENCY FASTER & EASIER.
Fresh out of college Jason was off to work for Arthur Anderson, one of the big 5 consulting firms. He quickly realized that he could never work for anyone other than himself. He decided to change direction, launch a digital agency that quickly grew to a multi-million dollar operation working with brands such as AT&T, Hitachi, and Lotus Cars. After 12 years of steady growth, the agency caught the attention of bigger agencies and Jason sold it in 2012.
Now, Jason leads http://JasonSwenk.com, a unique media
company & consultancy helping marketing agencies grow &
scale their agencies faster by applying the framework that he used
to grow, scale and eventually sell his agency. Jason has helped
over 10,000 agencies in 23 countries meet or exceed their business
Jason currently hosts two shows that are available for download…
The Smart Agency Master Class Podcast, dedicated to providing tactics and strategies to agency owners and decision makers that cut through the BS, focus on exactly what works and what doesn’t; and
SwenkToday a daily VLOG that documents the entrepreneur journey of building another multimillion-dollar business, where he shares the latest strategies and answers the most burning questions entrepreneurs have.
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