Can agencies take a note out of the SaaS playbook for a more client-centric pricing strategy?

AM2.0 #2

In issue #1, I discussed a risk analysis on a content-primary affiliate strategy, mainly directed toward service providers (agencies, consultants, managers).

Please check it out if you didn’t see it.

Today, I’m signing in from a coffee shop in Thomasville, GA to open a can of worms around pricing strategy 🪱

Specifically, I am posing the question, “Is a usage or consumption-based pricing model, similar to what you see in SaaS, a more optimal pricing model than the current pricing model?”

If so, then how would it be implemented?

Let’s get it.

Background

I have worked internally at agencies, run my own consultancy, been pitched to by other agencies, and listened to other founders talk about their pricing strategy.

So, I definitely have some context to speak on the realities of pricing in the affiliate industry today.

While this is not an exact understanding, I believe it is accurate enough to start this conversation.

Sips coffee.

Distribution of Pricing

Marvin Gaye Through-the-Grapevine Box Plot

I love visual representations of data.

Okay, I strongly like.

Thus, I present to you my “Super-Flawed-not-Reliable-Through-the-Grapevine-Affiliate Agency Retainer Box Plot.”

It helps to visualize what affiliate agencies charge both SAAS and e-commerce clients for retainer fees.

Considering a monthly retainer fee, I would expect around $2,000 to be the low end of the distribution and around $20,000 to be the high end. Most retainer fees are between $4,000 and $10,000 per month.

These retainer fee structures would comprise flat retainers only, flat fees and commissions, and commissions-only pricing models.

I would also suspect a right skew, with high variability in agency charges once you get past $10k per month.

Once you hit those thresholds, you’ll be working with a different type of clientele—enterprise, big tech, etc.