Digital Agency market rates per hour/project and sample legal forms/pitfalls to avoid?

13 replies
Hello all,

Could I ask for your help please with two questions?

1) I'm a new startup digital agency offering website design, social media services, SEM, etc.

I potentially have my first client and am due to meet with them in a few days to discuss the exact pricing for services and signing of contract.

My question is does anybody here know of an industry website/reference that lists market hourly rates/project rates for digital marketing services such as the one I listed above?

I'd like to know this in case the client asks where I referenced my figures from and would like to have a way to handle any potential objections by saying I'm giving them a discount since I'm new.

2) Does anybody with experience know of any legal pitfalls to avoid and good contract forms to use?

I'm worried there might be some small item that I'm overlooking that is a potentially big problem in the digital marketing space. For example, if I outsource my work to someone in another country and their service isn't up to par with what the client expects, am I liable? If so, that means I need to figure in a much larger margin for the risk I'm taking. Or let's take the case of SEO. If I refer a company to some other company and my client ends up paying them directly but they don't deliver the services as promised, could I be held liable for recommending them?

In my previous industry, these were valid concerns and in some cases, illegal, to charge for some services without a specific license so I want to make sure all my T's are crossed and I's are dotted.

Thanks in advance!
GJ
#agency #avoid #digital #forms or pitfalls #hour or project #legal #market #rates #sample
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  • Profile picture of the author Blakers1
    Check this out for average rates: https://www.getcredo.com/digital-mar...ricing-survey/

    As far as liability goes, I've never worried about that. What I DO concern myself with is the reputation of my agency, so I always pick the best referral partners possible.

    We specifically do a lot of SEO work and I have a disclaimer in our contracts that says something like "We can't control Google's algo and aren't responsible for rank drops". It's a CYA sort of thing. We have never had a single issue like this, but it's there just in case.
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  • Profile picture of the author gjfukit
    Hi Blakers1,


    Thanks very much for your time and feedback. I really appreciate it.


    I'll also PM you to learn more about your SEO services (can you work with other agencies?) in case a client asks for something that I am not confident in handling.


    Thanks again,
    GJ
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  • Profile picture of the author OptedIn
    Originally Posted by gjfukit View Post

    For example, if I outsource my work to someone in another country and their service isn't up to par with what the client expects, am I liable?
    Yes - you are totally liable. You were paid money and you chose to outsource. Your responsibility, fully!

    Or let's take the case of SEO. If I refer a company to some other company and my client ends up paying them directly but they don't deliver the services as promised, could I be held liable for recommending them?
    Not financially, but you will certainly be held liable in the mind of your client who may expect you to recompense them for the money they lost. If nothing else, there's little hope of that client ever trusting you, again and I doubt they would ever rehire you and I would expect them to speak poorly about you to other businesses.

    Business owners rarely share info when they are happy as the want to keep you all to themselves. Screw them over and they will live to bury you.

    Doubtful you need any license beyond a DBA or a fictitious name registration. Call your local municipality. No one here can answer this for you .
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  • Profile picture of the author Frank Donovan
    Originally Posted by gjfukit View Post

    For example, if I outsource my work to someone in another country and their service isn't up to par with what the client expects, am I liable? If so, that means I need to figure in a much larger margin for the risk I'm taking.
    No you don't. What you should do is test your intended outsources for quality, suitability and reliability before you start to use them professionally. Otherwise, you're using your clients as guinea-pigs.

    Even if you charge extra to cover your "risk", that won't do anything to build or protect your reputation - which is going to be vital in the development of your business.
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    • Profile picture of the author gjfukit
      Thanks for being frank Frank (sorry couldn't resist the cheesy joke)


      In all seriousness, do you have any words of wisdom for "vetting" potential 3rd party individuals/companies to outsource to? Somebody should actually make a course for that or a blog post as that small step is extremely critical to many IM business models.
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  • Profile picture of the author Steve B
    Originally Posted by gjfukit View Post

    I potentially have my first client and am due to meet with them in a few days to discuss the exact pricing for services and signing of contract.



    gjfukit,


    Excuse me for saying so ... but honestly, if you have to ask random strangers on a public forum what you should be charging your clients, what the terms of your contract with them ought to include, and where the legal pitfalls lie, you are not yet ready to do business with anyone.


    You should have already thoroughly researched the marketplace, established your price points, examined and analyzed your direct competition, put legal protections in place after reviewing your own particular case with a legal professional, and set your own agency terms, conditions, and policies prior to meeting with anyone.


    If you want to look like a credible agency, you have to be a credible agency. It all starts with getting your ducks lined up and ready for your first step out into the marketplace.


    The best to you in this new venture.


    Steve
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  • Profile picture of the author Sid Hale
    You've gotten some good input here, but let me add a few other observations...

    First, what you have outlined is not a business, but rather a group of services that you are willing to provide on an hourly basis. You are not building any assets that you can leverage with future services contracts. You are proposing to become a contract worker, with no benefits, no paid holidays, no insurance, etc.

    In addition, you are doing nothing to distinguish your services from those of your competitors, and you will almost surely wind up in a "race to the bottom" when it comes pricing those services simply because you are setting your services up to compete only on price.

    What you should do instead (IMHO) is to negotiate each project with the prospective client before establishing a price with the customer. The customer contract should include a Statement of Services that details what you are to provide. The customer should be provided a price quote and a payment schedule as a part of the contract.

    Don't charge based on the number of hours required to complete the contract, but rather on the VALUE of the deliverables. The first payment should be due at acceptance of the contract, and it should be for at least the minimal acceptable amount that covers your cost to produce the deliverables (including all costs for your time, machine resources, overheads, etc.)

    The next payment should be payable upon your delivery of the services. If you are contracted to install any of the deliverables, another payment can be due upon completion of any such installation.

    Try to limit the total number of payments and don't start on the next "phase" of the contract until after receipt of payment for the prior phase. If the project schedule won't allow for payment delays... you can proceed with the project, but DO NOT deliver the next phase until AFTER payment is received for the prior phase.

    Lastly, you should anticipate the need for changes after the client has received any of the deliverables. Those changes should NOT be included at no charge. Instead, include verbiage in your original contract that establishes how change requests will be dealt with (i.e. a new contract with a new set of deliverables, and it's own payment schedule).

    With this model, you are not contracting for "hours worked", so there is no need to establish a rate of pay. You are contracting for deliverables and charging the customer for the production of those deliverables.
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    • Profile picture of the author gjfukit
      Hi Sid, thanks for the time spent in crafting a very helpful, knowledgeable reply! I actually took a lot of your advice during my 2nd meeting with client and agree with your overall, macro plan, of setting up an asset that happens to be a business. However, since I am a startup, there are many moving parts that need to be accomplished before I get to that level (sorry for stating the obvious, I'm doing open stream consciousness here) so as an example, if I look at this purely from a numbers standpoint, it makes sense to arbitrage the services to 3rd party companies/individuals but per the multiple posts in this thread, opens up a lot of liability, both reputational and financial, so I now need to have a new process/workflow to "properly vet" these potential partners with no cash flow and no projects (do I just come up with some fake project to gauge their skill level?)


      Also, if you look at another popular thread started by Gabriel, the head of Warrior Forum, even he advocates being a "freelancer" until one has their first 5 to 10 serious clients. So to summarize, I agree with all your points but I'm still in the phase where I have to balance short term micro plans with long term macro goals.


      Thanks
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  • Profile picture of the author gjfukit
    Thank you all for your very helpful and frank feedback.



    I am actually preparing my presentation now as I compile all my research and analysis that I've been doing for the last few days so I'll reply to this thread again at a later date for more feedback and also if it helps anybody else who might be in a similar situation.


    I will say that I believe in transparency and integrity so was going to be upfront that I am new in this industry, thus the discount (for a limited time) but feel in my strong opinion that the value I bring is by putting all the pieces together. Having been on the opposite side of the table in the past, I can relate to small business owners who might not know all the intricacies of each marketing channel (SEO, SEM, Social Media) and by having a second set of eyes to help them plan out their long term strategy, in my humble opinion, goes a lot further than merely pointing out what the best H1 tag should be or SERP.



    (as an FYI, I actually don't think SEO would be the immediate right fit for this company as they're a small fashion boutique so offline marketing, Instragram, Facebook and their current database seems a smarter initial focus with SEO down the road if they see ROI)


    thanks again guys and keeping my fingers crossed!
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  • Profile picture of the author mfried41
    GJ,

    The fact that you are asking these questions is sort of alarming given the amount of time between the ask, and your meeting with potential client. That said, these are good questions and a lot of people might have them too

    Just charge a flat hourly rate for your services to start off. You will quickly establish a fair market rate through negotiation (back and forth with your first potential client). As you continue to grow you will figure out what the labor cost is to you for each service and you will revise accordingly. Are you planning to disclose the fact that you are outsourcing? If so, I would discuss the risks and rewards with your client ahead of time. If you are not planning to disclose, of course you are assuming any and all performance risk and responsibility with your client (you may be able to work something out with your outsourced company.)
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    • Profile picture of the author gjfukit
      Hello all, thank you again for all your replies and I'll reply to each one separately. Additionally, if this helps anybody else who is in the same boat as I am, I found the following link below from the ANA Association of National Advertisers and a few other links to more user friendly contracts so at least we can have a base. I've also spoken to an old friend who is a lawyer who reached out to one of his other clients who is in the ad industry so if I find out anything else, will post here to help the community.



      https://www.ana.net/content/show/id/...tions-contract


      https://www.docracy.com/0da97gpqtky/...ising-services


      https://templates.qwilr.com/IpjnbDplQH6c




      Originally Posted by mfried41 View Post

      GJ,

      The fact that you are asking these questions is sort of alarming given the amount of time between the ask, and your meeting with potential client. That said, these are good questions and a lot of people might have them too

      Just charge a flat hourly rate for your services to start off. You will quickly establish a fair market rate through negotiation (back and forth with your first potential client). As you continue to grow you will figure out what the labor cost is to you for each service and you will revise accordingly. Are you planning to disclose the fact that you are outsourcing? If so, I would discuss the risks and rewards with your client ahead of time. If you are not planning to disclose, of course you are assuming any and all performance risk and responsibility with your client (you may be able to work something out with your outsourced company.)

      Thanks @mfried41, that makes sense. Just let the market dictate what price point I can charge. I guess the reason I wanted to have a separate resource (which Blakers1 provided) was to have a counter argument to use in my "beginner's pitch" that I'd give a 50% discount due to my inexperience. But I'll def keep your suggestion in mind as like any business, it comes down to what the market will bear

      Originally Posted by OptedIn View Post

      Yes - you are totally liable. You were paid money and you chose to outsource. Your responsibility, fully!



      Not financially, but you will certainly be held liable in the mind of your client who may expect you to recompense them for the money they lost. If nothing else, there's little hope of that client ever trusting you, again and I doubt they would ever rehire you and I would expect them to speak poorly about you to other businesses.

      Business owners rarely share info when they are happy as the want to keep you all to themselves. Screw them over and they will live to bury you.

      Doubtful you need any license beyond a DBA or a fictitious name registration. Call your local municipality. No one here can answer this for you .

      Hi @OptedIn, thank you for the blunt truth! I agree wholeheartedly with everything you said and thus, my rationale for starting this thread (in addition to other research I'm currently doing) to ensure any potential clients get nothing but fair, professional service. May I ask your vetting process for dealing with 3rd party companies you outsource to (if any?)


      Additionally, you emphasize a much larger potential issue that I have yet to really hear spoken about in the internet marketing world, regarding people expecting YOU to compensate them for their money lost with 3rd party companies. For example, while I learned a few things from Russell Brunson, I've heard from others how Clickfunnels isn't reliable and has had historical problems. And I think somebody else here posted about MOBE. A lot of IM products pitched here and in general are based on you selling services to someone else but if stuff hits the fan, how do we as a community deal with it so that not only are we protecting our reputation and financial situation but also that of the customer?
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      • Profile picture of the author OptedIn
        Originally Posted by gjfukit View Post

        Hi @OptedIn, thank you for the blunt truth! I agree wholeheartedly with everything you said and thus, my rationale for starting this thread (in addition to other research I'm currently doing) to ensure any potential clients get nothing but fair, professional service. May I ask your vetting process for dealing with 3rd party companies you outsource to (if any?)
        Personally, I was never big on outsourcing. I always operated from the standpoint that I would rather offer less services, but be comfortable that I could do the work myself, than try to make it look like I did everything under the sun.

        If I did outsource a particular project, it was always to people that I had built a years-long relationship with, so the 'vetting' was not an issue.

        Crawl before you walk and walk before you run. Build slowly, since you are building your reputation at the same time as you are increasing your income. Ding your reputation and your income will suffer.

        Slow and steady wins the race.

        Cheers.

        P.S. My apologies. I generally loathe clich├ęs. :-)
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        • Profile picture of the author Sid Hale
          Originally Posted by OptedIn View Post

          Personally, I was never big on outsourcing. I always operated from the standpoint that I would rather offer less services, but be comfortable that I could do the work myself, than try to make it look like I did everything under the sun.

          If I did outsource a particular project, it was always to people that I had built a years-long relationship with, so the 'vetting' was not an issue.
          This has been my M.O., as well.

          Outsourcing sounds great, but can bring its own set of headaches. If each job is a "custom" job, you not only have to make sure that you understand the customer's requirements, but you also need to make sure that your outsourced resource totally understands those requirements.

          When you quote a job for a customer, you not only commit to deliver at a certain price, but also within a certain schedule. What happens when your outsourced provider fails to deliver on time?

          If the end product requires any after sale support, is your outsourcer going to be available, and if not... are you going to be equipped to support what he has provided?

          If you can't do the work yourself (or with your own staff), you are putting your reputation in the hands of others.
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