There has never been a greater demand for digital marketing services, or more competition to sell them.

In this highly competitive industry, it’s important to stand out from your competition and offer more than your counterparts. Your clients will appreciate value-added services that deliver real results that they can measure. 

How do you price your services in such a way that you aren’t outbid, but you’re also capitalizing on every dollar you bring in?

What Do Digital Marketing Agencies Charge?

Obviously, you should explore the market to ensure you haven’t priced yourself out of the running, but make sure that you’re using every dollar of your client’s budget to its fullest capacity.

Taking care of your customers, no matter their budget, will ensure your portfolio continues to shine and you glean the financial rewards.

There are several ways you can price your services as we will outline below. The best way to keep your clients coming back is to work on custom and collaborative solutions that benefit them, with results-driven data they can see working for their bottom line. If they succeed, you do too.

In order to offer the best for your clients, it’s important to put yourself in their shoes as they ask themselves how much does it cost to hire a digital marketer? Before we can answer that question, we need them to make decisions about their marketing budget, goals, and approach.

Among the factors that affect the cost of digital marketing services are:

Expectations and Goals for Growth

Your client may want to be aggressive or conservative with their marketing spend, based on their growth goals as well as the size of their company. Your agency should devise strategies that match their expectations, but work with their budget to scale with your goals.

Marketing budgets typically range between 5% and 30% of total revenue, depending on the degree to which marketing success is linked to a company’s growth goals. Maximizing the budget your client has set out for you is key to their growth success, and delivering those results will allow them to increase their spending as they grow.

Agency Experience

Digital marketing is an industry in which companies get what they pay for. The rates of an established digital marketing agency are likely to be higher than smaller companies trying to build their reputation. A proven track record of digital marketing success usually attracts higher prices. 

If you are just starting out, that may mean taking a smaller piece of the pie until you are well established. It’s like any other industry: if you want to run with the big dogs, you have to grow into a big dog. Hard work will pay off, but to really stand out, you need to show your work to your clients.

Company Size

Obviously, the digital marketing budgets of companies of various sizes will vary. Small businesses have different needs than multinational corporations. Good digital marketing agencies will take the time to learn about their client and charge appropriately based on the size and scope of their campaign.

Great digital marketing agencies will take that budget and maximize every dollar to repurpose content across more advertising avenues.

Stand-out digital marketing agencies will regularly evaluate strategies and pivot when necessary.

The best digital marketing agencies will deliver all of these results in a tangible way that clients can evaluate for themselves and collaborate on the next step with their agency.

Digital Marketing Strategies

There is no “one-size-fits-all” solution for digital marketing; the strategies, tactics, and associated costs will fluctuate depending on your client’s objectives. A TikTok video marketing campaign may provide immediate return on investment for some companies, whereas search marketing can provide long-term results for others. There are different costs and time commitments associated with each form of digital marketing. It’s up to you to explore all avenues with your client and find solutions that work for their industry.

Typical Agency Pricing Models: A Brief Overview

The majority of digital marketing agencies charge their clients through project-based fees or monthly retainers. An agency’s pricing strategy is largely determined by its digital marketing strategy.

When it comes to digital marketing, one of the biggest factors influencing your client’s online marketing costs is the pricing model of your agency. There are several ways you can set your pricing, but it’s best to offer a mix of some of these approaches in packaged pricing:

Packaged Pricing / Tiered Pricing

Digital marketing agencies offer packaged pricing in order to give the client the best-case scenario. Various services are available to choose from.

Both clients and providers benefit from package pricing, which provides clarity about what will be delivered. Packages can be customized to fit the needs and budget of clients.

Be certain that you are knowledgeable and experienced enough to perform all of the tasks that you are selling with packaged pricing.

This kind of pricing qualifies buyers, so clients know the digital marketing cost upfront. This may be helpful for them to plan their next move, such as adding another service once they see results from their initial contract. It also gives you the opportunity to add on as clients get excited about the results you’re delivering.

Menu Pricing

Some agencies are of the mindset that bundling isn’t as beneficial as pricing services separately. By choosing exactly what they need, clients have the option of picking and choosing. There are several issues with this as clients may not understand the nuances involved in maximizing their marketing dollars and they may leave opportunities on the table that you know will deliver results for them. Menu pricing may be good for add-ons that clients may be interested in, allowing you some room to upsell them during negotiations.

Project-Based Pricing

When your agency uses a project-based pricing model, it pays a fixed amount for a project, such as developing and launching a marketing campaign for your client’s new product. Agency and consultant collaboration may be possible with project-based models. This may be a good way to land a regular client if you have performed well on their most recent endeavor.

Monthly (Retainer) Pricing 

With a monthly digital marketing pricing plan, your client retains your services on a monthly basis. You’ll often see this pricing model on a contract basis. This can be great for regular income, and clients appreciate knowing their monthly spend is predictable.

Hourly Pricing

With the hourly online marketing pricing model, your client pays an hourly fee based on the work you do for them. Consultants or freelancers usually charge an hourly rate, while some agencies charge an hourly rate for services outside the scope of your service agreement.

How Much Do Digital Marketers Charge?

Based on our research, an hourly digital marketing rate typically ranges between $50 and $500, with an average of $150.

Please note that the above figures are merely industry averages. The question of how much you should charge for digital marketing services depends on many factors.

Costs for online marketing vary and are dependent on factors specific to your business, especially when dealing with project-based or hourly work.

Costs Included in Digital Marketing Agency Rates

Knowing if you’re charging enough is important, but making sure your bottom line is healthy is key. Running an agency comes with all kinds of costs, depending on how you’re set up.

This figure is affected by several expenses, including:

Office Expenses

Rent, utilities, equipment, maintenance, supplies, and other operational costs apply whether you work from home or have a dedicated office space.

Employment Costs

A digital agency needs to consider things like benefits, insurance, and bonuses in addition to salaries. Are you hiring full-time employees, or will you use freelancers to get the work done? Both have their benefits, but freelancers cost less in the long run and are great for one-off projects when you need certain talents. 

Fees for Professional Services

Business ownership comes with its own set of expenses, ranging from government licensing fees to corporate taxes to attorney fees. These should never be overlooked.

Production Expenses

Multi-tool and software investments are necessary for digital agencies to run successful campaigns. Office productivity software, task management software, CRMs, SEO tools, email marketing, and social media automation are some of the most popular.

Additional Expenses

Capital is essential to help a business grow. Marketing professionals should budget for variable costs such as advertising, conference registrations, and directory listing fees. Expenses such as travel and lodging, loan repayments, and emergencies must also be considered.

The Average Cost of Digital Marketing Agency Pricing

Once you’ve established your expenses, it’s important to know what you’re going to charge. Ultimately, you want to be sure you are charging enough but not pricing yourself out of the game. 

If you’re new, you’re going to need to work hard to prove your worth, but don’t discount services just to attract clients. Check out the averages below and find your happy place somewhere in the middle, working towards demonstrating success and higher rates.

Marketing Strategy

Developing your client’s marketing strategy means taking a lot of time to understand your client’s business, their products, and their goals. You need to really hone in on who their customers are and develop strategies to speak to them. The average cost of internet marketing is a difficult thing to measure.

Niche marketing, when done well, can build strong connections with the customers as you meet their needs. It allows you to establish yourself as an authority and gain loyal supporters.

A company will typically spend between $10,000 and $40,000 on a tailored marketing campaign. Creating a marketing strategy typically starts below $10,000.

If you build up a strong community as a small startup, niche marketing can grow over time and expand into bigger markets. Your focus will be more on delivering quality content and building relationships with a smaller audience. Because there is less competition, it is a lot easier to identify and target your audience. Done right, niche marketing has the potential to turn paid advertising into organic advertising, maximizing your client’s budget.

SEO (Search Engine Optimization)

SEO refers to a number of techniques for improving your client’s ranking in online search results and provides a 2700% ROI, among the highest in digital marketing.

75% of people never look past the first page of search results.

It is absolutely useless to design the best website for your client if it isn’t ranked on the first page of search results. When their website ranks at the top of search engine results pages (SERPs), qualified leads will find and contact them when searching for products or services. You’ll get more traffic, phone calls, and revenue for your client with higher search rankings.

SEO generally costs an average of $10,000/month (depending on the size of the company—it can get up over $200,000/month for large corporations), or $100-$250/hour unless you’re providing SEO on a project-by-project basis.

SEO is an ongoing process, and it changes constantly. To maintain top rankings, SEO requires ongoing maintenance, but its results are well worth your client’s investment. You will generate more money in the long run for your agency when your clients include web design in their monthly budget.

PPC (Pay-per-click Advertising)

While you establish organic rankings through SEO, pay-per-click (PPC) advertising allows you to remain visible in search results. For businesses in most industries, PPC is a very affordable option to boost their rankings quickly. As soon as your ads go live, they can start generating qualified leads for your client. 

The best part about PPC is that your client only pays when people click their ads. They can avoid wasting money on marketing to people who are not interested in their products and services. Furthermore, you can use PPC to hone in on your target customers by utilizing the advanced targeting options.

An effective PPC campaign cannot and should not be cheap. Average monthly costs range from $250-$1500, but can exceed that. It is true that you get what you pay for.

PPC enables you to target people based on their demographics, location, and even the devices they use. PPC’s targeting options, coupled with its affordability, make it an integral part of a successful digital marketing campaign.

SMM (Social Media Marketing) and Mobile Marketing

SMS marketing, in-app marketing, social media marketing, location-based marketing, and proximity marketing are some of the top mobile marketing tactics. 61% of online purchases were made between November 2018 and January 2019, a 27% year-over-year increase, according to Google Consumer Insights.

A social media marketing campaign can cost anywhere from $300 to $5,000+ per month, depending on your agency. It is evident that there is a wide range here, and how much you charge depends on your experience as a company, the channels your client wants, and the type of content your client wants you to produce.

A Word on Affiliate Marketing

Affiliate marketing is predicted to play a role in the growth of digital advertising worldwide. 
Digital advertising worldwide is predicted to rise 12% to $794 billion in 2022, and affiliate marketing is predicted to play a role in this growth. The multibillion-dollar affiliate marketing industry has grown annually by 10% since 2015 and is projected to reach $8.2 billion by 2022.

As a result of these growth rates, marketers will increasingly invest in pay-for-performance affiliate marketing programs as a means of increasing ad spend. Knowing this part of the industry can increase your client’s reach considerably. PerformanceIN’s network data from early 2020 showed that about one-fourth of shoppers were new to the brands they bought through affiliate links. In April 2020, this jumped to 37% and it has remained well above 30% ever since.

By not implementing an affiliate marketing strategy for your clients, you are losing out on potential revenue, for them and for you.

Email and Automation Marketing

Email is also a tried and true strategy for digital marketing that is both affordable and effective. Businesses benefit from email marketing by increasing brand awareness and brand loyalty, resulting in higher lead conversions and sales. An email marketing campaign can give businesses an ROI of up to 4,300%.

The price of email marketing services can vary widely depending on your client’s needs, but most agencies charge anywhere from $300 to $2,000 a month. An email sequence lets you follow up with leads consistently, sending resources to add value, educate or sell your client’s products. Messenger bots have gained popularity along with email newsletters, as they have helped businesses reduce operational and personnel costs.

Video Marketing 

TikTok and YouTube allow brands to reach thousands of users every day all over the world with viral videos. Working with influential creators allows businesses to trend and create brand awareness, with user-generated content enhancing those efforts.

With TikTok’s success, Instagram, Facebook, and Snapchat began to compete for video features. Utilizing video transitions and creative options made creators jump on the trend so they could go viral on Instagram.

Pinterest and LinkedIn have also invested in their video features, as video continues to grow and allows brands to connect with their followers.

Despite the video marketing trend, you do not have to invest in expensive video services to serve your clients. It all comes down to storytelling and building relationships. Short-form videos tend to be engaging. To establish your client’s brand voice and connect with their community, it’s more important to focus on their content, such as their narrative.

So, what should you charge for video marketing services? That answer depends on your costs. You’ll need to factor in the time to make the video, whether it uses animation or real people, production and editing costs, and whether you need to hire a film team and/or talent to produce a good video. On average, a short video for social media can run your client upwards of $4,000 but can get as high as $35,000 for a one-minute video.

Web Design

A primary goal of digital marketing is to drive leads back to your clients’ sites. You want to make them look good to potential customers. Web design makes up nearly 95% of people’s first impressions, so it’s crucial to any online marketing strategy. Sites that look dated or take forever to load will most likely send visitors back to the search results page.

Ensure your site has a custom design that reflects the company’s brand and is easy to navigate so people can find the information they need. To improve user experience and make it easy for leads to contact you, you should also ensure their site loads at top speeds and offers easy navigation.

How Much Should a Digital Marketing Agency Charge?

The majority of businesses invest money in some form of digital marketing. Digital marketing is an investment that these businesses have made for years.

What percentage of these business owners could tell you their marketing return on investment (ROI) if you asked them individually?

There are various numbers, depending on the strategy you examine, but 44% of businesses have difficulty measuring their social media ROI. Furthermore, digital marketing ROI might not be accurately measured or executed by marketing professionals.

Being aware of this problem is important to the success of your digital marketing agency. 

How Can You Accurately Measure and Deliver Results to Your Clients?

Digital marketing is more affordable and effective than traditional marketing methods. Nevertheless, it is important for business owners to be aware of the costs involved before making such a commitment to drive their business growth.

Digital marketing can boost revenue by more than 109% if done correctly, but business owners should expect to spend about 10-20% of their revenue to make it successful.

Digital marketing is an ongoing strategy. Their budget may change as their business grows. Showing them the benefits and regularly evaluating the effectiveness of your work on their business is extremely important.