07. Pros and Cons of Pricing Your Services as a Social Media Manager

Podcast
Written By Jessica Sheehy
 

Setting your prices is arguably the most challenging part of starting your social media management business.

There are so many different factors to consider when choosing one of the most critical aspects of your new business. It's challenging to decide how you're going to price your services! Luckily, there are so many different options for charging, such as packages, retainers, hourly rates, and project-based rates, so you can pick the best option for your services, niche, and target audience.

In this episode, we are going to look at a list of the five most common ways to price your social media freelancing, plus the pros and cons of each!

Welcome back to another episode of Hashtag Managed. I'm really excited for today's episode because we are going to dive into a topic that we are talking about a lot. And it's a topic that every service provider is talking about in the online space. It's how do I price my services? In this episode, we're going to dive into the pros and cons of different pricing options and look at a few examples and talk about what really works. I'll uncover what my favorite model is and keep in mind that every model is the right answer. There's no right or wrong answer when it comes to pricing.

It really depends on you how you need to make a living, how you want to reach your next income goal, and so on. But use this episode as a basis for your current pricing structure, any changes that you want to make in your pricing in the near future, and any future services or packages that you want to offer down the line. Because you can have different pricing formats for different services that you're offering in your business, it's challenging to choose how you're going to price your services. I get it. We all get it. We've all been there. It's something that we're always fixing or editing or changing up at any stage in business, especially when you're first starting out.

There's no right or wrong answer, like I mentioned at the start of this show, but that doesn't mean you have to get it right the first time. Luckily, there are so many different options for charging, such as packages, retainers, hourly rates, project based rates, so you can pick the best option for your services, niche and target audience. Let's dive into all of the different ways to price your freelancing or social media management or any service that you're offering online, and the pros and cons of each.

Package Pricing

The first on our list is package pricing. This is a common way to price social media management, and it's also our favorite. However, it does not work for all freelancers, considering how different all of our services and skills can be. With this option, you usually group together your services and form different variations of each. So a few pros of package pricing it specifically states the expectations. So your client and you both know what the expectations of the project are. It doesn't define you by an hourly rate.

By grouping your services together, it allows for a complete and well rounded overview of what you'll be managing for them. And the final pro of package pricing is that it's a set price and it doesn't fluctuate. So your client always knows what they'll be paying for each period. A few cons of package pricing is that this type can make clients feel like it's not specifically tailored toward them. Now, you can do things to have a couple of different packages, and if there are a few things that you're open to customizing for your clients. That's a great way to increase the client experience that they're going to have. So for example, you can tailor it based on the platforms that you're managing. You can tailor it based on the number of pieces of content you are creating.

You can change up any small thing in the package to really make a big difference for your client. Another con is that it can be difficult to accommodate for all different kinds of clients in just a few packages. Now, this really does play into defining your signature service that we mentioned in the previous episode. But it's a great way to think about who you're working with.

It's always going to go back to this, but who your niche is, who your target client that you want to manage their socials for who they are. So it is going to be true that not every single client that maybe fits in your niche and especially clients who fit outside of your niche. Because can you work for people outside of your niche if they reach out to you and it's a great fit and you want to work with them?

Of course there's no rules that you need to turn down any client at all because you've created this brand or this niche for your business. Absolutely not. If it's someone you want to work with and it's a great fit and you're excited about the project, go for it. The final con to package pricing is that people can be scared off by the price upfront when compared to an hourly rate where they see it broken down. A great way to really help eliminate this is to be transparent about your pricing.

So if you don't want to put your exact package pricing on your website, put a starting at my packages start at $400 per month and they go up from there based on customizations. Any sort of verbiage like that can definitely help with eliminating that sticker shock that people have with finding out the prices. And it's a good way to pre qualify people to see if they are even in your budget. If they don't have a huge marketing budget, it's great to have them know that before they fill out your inquiry form, before they book that discovery call with you and those expectations are set from the start.

Retainer Model

Another really popular pricing model is a retainer. A retainer is when the client gives you a fixed amount and you can subtract from that amount based on the work that you do. So this usually pairs well with an hourly rate and every time you put an hour in, you subtract from the retainer until it's used up.

A few pros of a retainer pricing structure is that it allows for clients to choose a plan that is tailored around their budget. They know exactly how much they are spending and no added costs are added in. This is great for clients that have fluctuations in income and have different marketing needs as the year goes on. Now, a few cons of a retainer pricing model is that sometimes it's difficult as a social media manager to get everything done that you want to get done within that retainer. So it's going to have to play into two really important things here.

You're going to have to just manage your time efficiently. We want you to deliver great work for your clients, but we also don't want you to cheat yourself out on your rates that you are setting and we want to make sure that you are being paid for the work that you're doing. So another thing is that you might have to prioritize certain tasks over others.

So that really just depends on the allotted time spent to the retainer and how this is set up. But a great way to really combat both of these cons with this retainer model is to ensure that you have the expectation set of what you know you need to deliver for the client for that month or quarter, and they know what is to be expected and everything is prioritized. That way, everything is clear, no projects slip under the rug, and everything is clearly outlined.

Hourly Rate 

Now, the next pricing structure is probably one that you're familiar with, probably one that you started out with and maybe what you're working on. Now, I don't want to be the person to say that there is a right or wrong answer to pricing. There definitely is not. There is not a one size fits all strategy to a profitable social media management business that we can all run. Now, do I believe that there are systems and roadmaps based on the success that we've seen in different things that we've implemented? Of course, that's the entire mission of this podcast and the social savvy collective. But I don't want to be one to turn something away if it works for you. So I really think that that comes into the hourly rate.

This is as plain and simple as it sounds. You're charging by your hourly rate. So that means you set the rate and charge the client for the number of hours that you worked for and then the services fall under that within that scope of work.

Now, a few pros that fall under the hourly rate model is that you get paid exactly for the time you put in. So this does kind of draw a great area with a few cons and how you get more proficient and efficient in the tasks that you're doing. But it's very simple, cut and dry and straightforward. And that's also a great way to be transparent with clients because sometimes they really do value that in the service providers they're hiring.

Another pro is that it's easily comparable to other positions, which can be an advantage. You set the rate and can take your experience, education and demand into account so if you are being booked up really quickly, if you feel like you are working too much or your load is a little heavy, or if you feel that feeling of burnout sort of creeping in, this is a great way to combat that. This option is great for accounting and for the tasks that are surrounded with the hours. Everything is accounted for. It is very plain and simple, very straightforward and that's why a lot of people do love it, both service providers and clients.

Now, a few cons of the hourly rate model is that you become defined only by your hourly rate and not the level of difficulty or the tasks or the projects that you are working on. It can be difficult if you want to take your time on something or it can make you rush a little bit. If you have ever worked on a project where you know what you're doing, you're creating content for a brand new instagram client, you're auditing their account, you're spending time doing competitive analysis, market research, creating content, creating the strategy and then going through the execution. Now that's probably the same system from client to client. But there are a lot of factors that really do play into that.

For example, if you're creating a ton of content for them, if it's an industry that you're not really familiar with, if it's a client who doesn't have a ton of content, then it's going to take you a little bit more time to create more content and to source more content. So it can really be a downfall to trade your knowledge and skills for time, which is super, super valuable. You might have to invest in a time tracking system. Personally, I use Toggle within our own business social savvy. I like to time track everything. I like to time track when I am working on the business. So if I'm working on anything social savvy related, I like to track that. I like to then define it a little bit further by marketing or operations or administrative finances, anything like that. And then I like to do different time tracking. Not because we bill clients by the hourly rate, because we go more for the package model, but I want to make sure that we're efficient with the time, that we're not spending too much time on the different things that we're doing.

Since we do have a package of things we're delivering, I want to still make sure that we're being profitable as we get quicker or if there are more intensive client projects that come in or industries we're not quite familiar with and need to do a little bit more groundwork. I just want to make sure that we're still profitable in that sense. So Toggle is a really great resource and tool to use for any service business, especially for social media management. Just to make sure you're tracking things, whether you are doing the hourly base model or you're not.

And finally, the last con to an hourly model is that hours can rack up quickly and the client can feel like they don't have control on the cost. So I think it's really important with an hourly model to set the expectations with the client from the start of how many hours you're going to work. Now at times, and I've said this before and I'll probably keep saying it again, it is hard to really estimate the amount of hours on a project. It's great to always give a range. So if you know that you'll probably be doing a project that's going to take about five to 8 hours a week, I would really let them know it's going to be five to 8 hours. That way they know the lower end of the budget and the higher end of the budget. So for their own accounting reasons, they can make sure that they're okay to sign off on that because we don't want to get into a situation with a client ever to where they can't afford our package or our rates after the work is done, which is especially important. And it's great to really let the client know why there is that range.

Now that doesn't necessarily mean that you're going to work super quickly and get work done really fast to get that lower end of the budget. But you want to have that room for unexpected events to happen, which definitely can happen in social media and content creation. A tool could crash, canva could go down, instagram might not be posting. Maybe you need to do a little bit more added research because upon your competitive analysis you learned a ton about their competitors and what they're doing and that might change a little bit the strategy that you're creating for that client. So just being really upfront and clear with that is a great way to set the expectation for the client. And so you know how many hours you'll be working for your own time management and of course at the end of the month for your accounting when you're looking at the revenue that you brought in.

Project-Based Rate

Another type of pricing model is a project based rate. A few pros of a project based rate is that this is perfect for those that offer more campaign style launches or anything project specific in social media management services. So this is great for brands that just need help once in a while. This is a great way to help people get their social media up and running. Sometimes clients want to run their own social media or maybe they have an in house team or someone else who can do it, but they want to make sure that they're set up correctly. Things are optimized and ready to go. Things that can fall under the project based rate are audits strategy consultations launches of new products or services, or offers Black Friday Cyber Monday campaigns holiday campaigns. Anything that falls under that one time project based rate can be a great way to set up a good one off service for a client.

Now, a few cons is that it limits you to just a certain period of time. So typically, launches range from many different styles and timelines, but typically they're going to be about the one to two weeks long in the launch time. Now, if you're working with a client on a launch, I think it's super, super important to make sure that you are accounting for anything pre pre launch. And when I say pre pre launch, I mean the planning, the meeting with the team, the understanding, the offer, the service, the product, so you know exactly where you'll step in to create the strategy.

Now the prelaunch is what we're doing to their audience, to their people. We're getting them ready for the launch. We've already gotten ourselves ready and prepped for the project in the pre pre phase. Now we're in the pre launch phase and we want to make sure that we are really nurturing and getting their buyers ready to buy. When it's time to open the cart, then you have the launch phase. That's when you open the cart, you're promoting like crazy. You're really pushing heavy.

Everything that you've been working up, too, is now being shared, public facing, and then the cart will close at whatever designated time. And then I think there's the post launch phase. I think this is so important for every project base to always have accounted for the post phase. That way you're being paid for that work. You're looking over all the analytics. You're pulling the analytics, you're seeing what went well. Maybe you're presenting it to the team or the client or the company and you're really downloading about what happened for that. So another con to a project based rate is that your workload per project can vary and unexpected things can pop up and add more time to the project. So it depends on how you structure your projects. But if you do book them out in advance, then you can have that consistent income month over month. But some projects could be more or less, but that really just depends on the expectations that you set with those clients when you're working on those projects and really signing those contracts from the start.

And always, I think with any pricing model, it goes without saying, leave in some cushion room in what you're charging in billing at the end of the day. So that way you're being paid for everything. You're being paid for the tools you're using for the added time. Maybe your WiFi was down and it just cuts into your workday and really throws things off. But we want to make sure we cut in for those unexpected things to pop up because inevitably they do and there's really not much that we can do about that.

Performance-Based Rate

So the final pricing model that I want to COVID in today's episode is a performance based rate. So this is something that is not really, really used so much in social media marketing. Other areas of digital marketing and paid advertising really lean into the performance based rate and it really depends exactly on the strategy, the execution that you're doing. But charging based on performance is another option. With so many analytics in our industry, performance based rates are definitely possible to do. And I don't want you to think, oh no, I don't know if I can do that, I don't know, but let's cover exactly what it means because it's probably a little bit different than what you're expecting.

A few pros of a performance based rate is that it capitalizes on your successes. Have you ever done maybe you're in the project based business model and you solely help clients launch on social media if you are noticing a huge trend and great results with the projects you're launching and you're seeing amazing results launch after launch because let's face it, you're getting better. You're learning new strategies, you're testing new things. Let's capitalize on that success. This is perfect for any analytic mindset motivated by numbers, results, anything like that. This is perfect for you and your clients.

Feel a sense of you get what you're paying for. And now this is not to be said that if they're paying low, they're getting little. That's definitely not what I'm saying. But we want them to know like, hey, you're bringing insane value to their business by helping them reach this five figure, six figure, seven figure launch and beyond.

Or you're reaching different metrics that maybe they've never reached in their business before. Maybe more people are subscribing to their membership model. Maybe more people are opting in. Maybe there's way more clicks and interest and engagement than ever before. Maybe they're getting more email subscribers. Or anything that can be performance based can fall under that and your clients will feel the sense of wow, we are really increasing results and they're just going to want more and more. And that is how you can have that become a recurring service or just a recurring client whenever they're launching something next.

Now I know I've really hyped up a performance based rate and you're probably still on the fence. But I think it's important like we've covered in every other model to COVID the cons. So there are a lot of factors that come together to get results and you might put a lot of work in and not start turning results and showing your performance until later on down the road, the middle of the project, maybe the end of the project. So there's a few things that we can kind of do to help combat that. Another con is that results and performance are unpredictable on organic social media marketing. No matter how good your content strategy is or your growth hacking is, it's unpredictable. We are really putting power in the consumer's hands here. And of course, there's a lot of things we can do.

We know best practices, we know great content, we know all of the above. But sometimes it just comes down to the unpredictability, which can help us in both favors for sure, pros and cons, but definitely in the cons and sometimes favors of results over genuine engagement and community creation can happen. So with that being said, when you're creating content or creating a strategy, there can be metrics that can be overanalyzed, for example, or different things that can be set. So it's really important to be very clear with the client or business owner or company what their expectations are, setting those KPIs to reach them, and then you having the performance based rate over that. So a great rule of thumb for a performance based rate package is to have a base package. This is going to be the base package and you've got to take it with a grain of salt.

If things unexpectedly go on, maybe things aren't as successful, then having that base rate that you're okay with taking home, and then having that performance base rate, that increases the percentages based on sales that are happening, on clients that are closed, on results that are made. And that of course, needs to be something that you and the client can agree on. Now, I know that we covered a lot of different pricing models for a social media management business in this episode. I really hope you got some great golden nuggets out of it.

I know there's a lot and a lot of examples and of course a lot of pros and cons to go with everything. So feel free to save this episode, come back to it, listen to it, and if you have any questions about pricing, please feel free to jump in our free Facebook community, the Social Savvy Collective. We're more than happy to look over your pricing, your style of packages or performance based packages or whatever model you've chosen after listening to this episode. And of course, we can't wait to support you on your social media management journey in any way that we can until next week.

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Thanks for listening!

Jessica Sheehy
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