Agency Pricing 101: From Hourly Rates to Value-Based Success
Introduction
Pricing influences every aspect of your business — from client acquisition to profitability to how fast you grow and how happy your team is. In fact, we'd argue strategic pricing is one of the biggest differentiators between mega-successful agencies and those getting by on razor-thin margins.
If you’re like many agency leaders, you’re feeling the pinch:
You started with hourly rates that made sense at the start, but now your margins are shrinking as your team grows.
You're stuck in the feast-or-famine cycle of project work and crave more predictable revenue.
You know you're undercharging for the value you deliver, but fear raising prices will scare your agency clients away.
You’re working harder, not smarter — and you're exhausted.
We get it. You want more time to make an impact, more margin to fuel growth, and more stability for your sanity.
This playbook will show you how to build a pricing strategy that does all that — one that communicates your value, attracts the right clients, and protects your agency’s profitability. We'll also share insights from:
Tony Bradberry, Managing Director at B2B agency Grey Matter
... who navigated these exact challenges and reshaped his agency’s pricing model for sustainable growth.
Let’s help you move beyond “What’s the going rate?” to start pricing with purpose.
Price to lead,
not to chase
We said pricing affects every element of your business, and we meant it.
Pricing immediately signals where you sit in the market. This positioning dictates who your competition is, what kind of clients you attract, and the perceived value you drive for them. It influences how quickly you’ll grow, the talent you can afford to hire, and how you’ll invest in their growth.
Yet, too often, pricing is reactive, based on what others charge or what feels safe.
But there’s a deeper challenge to consider, too — pricing doesn’t always reflect the agency’s true value or attract their ideal customer. And that’s a problem, as Tony explains,
If your current pricing came from any of the following, it might be time for a rethink:
Cost-plus pricing: You simply added up the cost of fulfillment and added a markup for marketing and your own salary. That might cover your bills, but it says nothing about your value or market positioning.
Competitor-based pricing: You did a quick search on industry rates and undercut them to be “competitive.” That’s not strategy; it’s a race to the bottom.
“Foot in the door” pricing: You offer a discount for the first project hoping to prove your value later. But underpricing doesn’t build trust — you’re an expert, so act like it.
Each of these reactive models limits your ability to shape your business intentionally. And they often lead to unsustainable business models and client relationships. Luckily, there is a smarter approach rooted in value, strategy, and growth; it starts by understanding what really drives your pricing decisions.
The 7 strategic dials behind every pricing decision
Before selecting a pricing model, consider your financial priorities and what you’re optimizing for. Think of your business like a dashboard with seven dials that determine how you price, package, and pitch your services. These dials represent your agency’s priorities:
PredictabilityScalabilityRisk & upside potentialPositioningProfitabilityReputationTimelines
Predictability
Would you rather drive consistent revenue or gamble slower periods in the hope of scoring some big projects along the way? How does payment timing affect your cash flow? Are you getting paid upfront, at milestones, or on a consistent monthly retainer?
Scalability
Are you planning to scale your operations to dizzying heights or sustain a steady pace? The more aggressive your growth goals, the more important it is to build a delivery and pricing system enabling you to scale profitably without burning out your team.
Risk & upside potential
How much uncertainty can your business stomach? If you’re starting out, you might need the security of guaranteed fees. But if you’ve got some runway, you might consider higher-risk, higher-reward options like revenue share or performance-based pricing.
Positioning
How does your pricing model compare to your competitors? Are you differentiating yourself with pricing in a way that adds perceived value and positions yourself as the go-to choice for your target client? Competing on price alone is a race to the bottom.
Profitability
There are two levels to this: how profitable is your agency overall, and how profitable is each individual client or project?
Tony's team at Grey Matter learned the hard way that tracking profitability across different clients is essential. Sure, two clients might pay you $2,000 each, but if one takes five hours to execute and the other takes 20, you’ve got two very different margin realities. As Tony puts it, "all revenue is not created equal."
Granular time tracking shows you which clients are dragging your margins — and where you can streamline, charge more, or say no.
Reputation
It takes 100 good reviews to convince someone to buy, and just one bad review to send them looking elsewhere. The strength of your reputation directly influences what you can (and should) charge. An agency with a strong track record of results and glowing testimonials can command premium prices compared to one still building credibility.
Timeline
Do you turn projects around with lightning speed or work on leisurely lead times? If you're frequently under pressure to deliver quickly, build that into your pricing. Rush fees compensate for your effort and reflect the opportunity cost of prioritizing one client over others. The more flexibility you have in your timelines, the more you can experiment with pricing structures that favor long-term planning and smoother capacity management.
Now you’ve mapped out your priorities, it’s time to explore which pricing models align best — and how to make them work in practice.
8 agency pricing models (and how to choose the best fit)
Project-based
You quote a fixed price for a specific project, so the client knows upfront exactly what they'll receive and what it’ll cost.
Agencies with defined deliverables and tight scopes, like web design, branding, or video production.
- Provides clear expectations for clients — they know exactly what they're getting
- Is easier to sell than abstract concepts like hours or retainers
- Provides more time freedom if you’re efficient
- Has the potential for higher profit margins
- Needs rigid boundaries to avoid the scope creep monster
- May eat into margins based on the volume of client revisions
- Expect cash flow gaps between projects
- Risks eroding your margin if you underestimate the scope of work
A digital marketing agency charges $15,000 for a complete website redesign package that includes discovery, wireframing, design, development, and launch. They require 50% upfront and 50% upon completion, with a clear change request process that bills additional revisions at $150/hour.
Productized Packages
You create standardized service packages with set deliverables and price points – think "essentials, premium, elite" packages. Clients choose a tier based on their needs.
Agencies with repeatable processes and similar client needs across projects, like SEO services or social media management.
- Simplifies sales with predefined packages
- Streamlines operations through standardization
- Creates natural upsell paths for clients
- Positions you above "custom quote" competitors
- Provides more time freedom if you’re efficient
- Limits flexibility for unique client needs
- Risks selling solutions that don't fit the problem
- Can severely limit growth potential
An SEO agency offers three packages: Essentials ($2,500/month) covering basic optimization, Premium ($5,000/month) adding content creation and link building, and Elite ($10,000/month) including advanced technical SEO and custom reporting. Each package lists exactly what deliverables the client receives monthly.
Retainer
The client pays a recurring monthly fee to “book” a set number of hours per month. The specific work delivered may vary month to month based on changing needs and priorities, but the commitment and revenue remain stable.
Agencies providing ongoing services where needs evolve over time, like PR, content marketing, or growth marketing.
- Creates predictable, stable revenue for smoother cash flow
- Builds deeper, ongoing client relationships
- Allows flexibility to adjust tactics based on what's working
- Reduces constant pitching and proposal writing
- Can result in clients treating you like employees
- Requires clear boundaries to prevent scope creep
- May be difficult for clients to see ongoing value,
- Trades time for money, so is difficult to scale profit without robust time tracking
A digital PR agency charges clients $8,000/month for 40 hours of senior-level PR work. They hold monthly strategy sessions to determine the best use of hours — whether media pitching, content creation, or crisis management — allowing flexibility to address changing priorities while maintaining predictable revenue.
Day Rate
You charge a flat rate per day for your time, regardless of the exact deliverables. Clients pay for access, focus, and speed rather than a laundry list of outputs.
Specialized consultants, workshop facilitators, or agencies doing intensive on-site work.
- Is simple to explain and implement
- Works well for intensive, focused work
- Eliminates hourly penny-pinching
- Delivers specialized, high-value consulting
- Struggles to scale (limited by calendar days)
- Incentivizes slow delivery over efficiency
- Undervalues work that delivers high impact in less amount of time
- Lacks opportunities for passive or leveraged income
A brand strategy consultant charges $3,500 for a full-day workshop with a client's leadership team, delivering a facilitated session that results in core brand positioning and messaging frameworks. The day rate includes pre-work and a summary document but emphasizes high-value collaboration within a set timeframe.
Performance-driven
Similar to revenue share, you earn based on performance outcomes the client agrees to in advance, like leads generated, conversion rates, or other KPIs central to the client's business.
Agencies that deliver work with clear measurable outcomes, like lead generation, recruitment marketing, or direct response campaigns.
- Focuses everyone on clearly defined goals
- Commands premium rates when you deliver results
- Builds client retention naturally — clients don’t want to lose a top performer
- Positions your agency as a partner, not a vendor
- Requires clear definition of success metrics
- Can be contentious in terms of attribution
- Depends on client implementation for success (for example, sales teams following up)
- May be challenging for services with delayed or indirect impact
A B2B lead generation agency charges a base retainer of $5,000/month plus $250 per qualified lead delivered. They work with the client to clearly define lead qualification criteria and use a shared CRM to track attribution, creating transparency and alignment around success metrics.
Value-based
You price based on the economic value your work creates for clients rather than inputs (time) or outputs (deliverables). This model positions your service as an investment, not an expense.
Agencies with proven track records and clear ROI models, like vertical-specific marketing agencies, conversion specialists, or business transformation consultants.
- Maximizes profit margins by decoupling price from effort
- Elevates conversations from cost to investment
- Attracts clients who value results over deliverables
- Creates differentiation from commodity service providers
- Removes you from price comparisons — you’re in a category of one
- Requires sophisticated selling skills
- Depends on a strong track record and reputation
- Relies on measurable outcomes
- May require education for clients unfamiliar with value-based thinking
A specialized SaaS marketing agency has a track record of generating six figures in revenue for new clients in the first 30 days. They charge $55,000 for their services, regardless of the time or tactics it takes. Despite the high price, it’s still a no-brainer investment.
Hybrid Models
You blend two or more pricing models, for example, combining a base retainer with performance bonuses or pairing fixed fees with value-based pricing elements. Hybrid models allow you to adapt while maintaining profitability and flexibility.
Agencies serving diverse clients or offering a wide range of services — especially those looking to balance stability with upside.
- Balances predictability with upside potential
- Creates flexibility for diverse client needs
- Mitigates risks for both parties
- Allows testing of new models with lower commitment
- Can be complex to explain and administer
- Requires sophisticated tracking systems
- Can create confusion without clear documentation
- May be challenging to compare across different client agreements
Grey Matter's "Toolbox Method" is a perfect example of a successful hybrid approach.
Grey Matter’s “Toolbox Method”
Grey Matter once relied on productized packages, selling preset scopes of work with fixed monthly retainers. Their average client paid $3,200/month, but as client needs shifted, those packages became harder to scope and keep profitable. The agency hit a revenue ceiling, which led them to rethink their pricing model.
Looking for more agency profitability insights? Watch the full interview with Tony here
Instead of using rigid packages, Grey Matter has built a modular pricing system. They've identified around 20 core services — think tactics, playbooks, and deliverables — and priced each using historical time tracking and utilization data. Each "tool" is designed to meet a target margin based on exactly how much time it takes to deliver.
For each new client, the agency stacks up the most relevant deliverables into a custom package, accurately projects how much time and resources the whole thing will take, and offers an appropriate retainer price without sacrificing profit.
This has helped Grey Matter avoid boxing itself into an overly specific niche. Most clients come to them looking for growth — the tactics that get them there are secondary to the results.
For example, professional services clients operate in a high-trust industry, so they’ll need content, thought leadership, and slow nurturing approaches. By contrast, a SaaS or manufacturing client operates in a very problem-centric world, so paid ads addressing specific pain points might be a better approach for them. Grey Matter can dip into its toolbox and do both.
How to use time tracking data to price with confidence
You can have the most brilliant pricing strategy on paper, but without a robust time tracking system, it’s just theory.
Hidden inefficiencies, untracked hours, and mismatched scopes quietly eat away at your margins, and you might not even realize it. That’s why tools like Toggl Track are essential if you want your pricing strategy to work in the real world.
Track time with military-like precision
For Grey Matter, implementing time tracking in year two of business was a turning point. It revealed which clients were demanding the most effort for the least return and which services consistently ate into margins.
With that visibility, the agency was better able to restructure retainers, drop low-margin work, and replace with higher-value, better-aligned clients.
If you want to do the same, look for tools with detailed reporting that highlights exactly where your team’s hours are spent, broken down by client, project, and even specific tasks.
Once you have enough time data, you can compare estimated versus actual time spent on specific deliverables, revealing which services are consistently underpriced.
Keep profitability front and center
Even with good pricing, you still need to know: Is this actually profitable?
Any decent time-tracking system for teams should offer profitability reporting that answers this question by transforming raw time data into financial insight.
By assigning hourly rates to team members and projects, you can instantly see which clients, projects, and service types generate the best returns.
Want to go deeper? Track profitability trends over time to see if your scaling strategy is working or just generating more work for the same (or less) margin.
Account for non-billable hours, too
One of the biggest pricing mistakes agencies make? Ignoring non-billable time. Internal meetings, admin, business development, and marketing all add up, so if you’re only tracking what’s billable, you’re only seeing half the picture.
Tag and categorize both billable and non-billable time to gain full visibility into your team’s capacity and time drain. This should allow you to see your billable percentage at a glance — a visual metric for knowing when to streamline ops or raise prices.
Use data to push back against scope creep
Scope creep is a silent profit-killer for agencies. What starts with an innocent revision can quickly balloon into hours of unbilled work.
Project budgeting allows you to set hour limits for each project and receive alerts when you're approaching those boundaries. When a client questions an invoice or change order, detailed time logs pinpoint exactly where you spent additional hours.
Armed with this data, you can turn tough discussions with clients from subjective disagreements into objective business decisions.
Build solid client relationships
A successful pricing strategy makes clients feel they’ve received a bargain, even if it costs them five figures! Lean on your data to quantify the actual work delivered — it can be powerfully persuasive when communicating value to clients.
One of the most effective ways to gather this data is to look at how your team spends time on different aspects of a project (with tools like Toggl Track, you can share with clients via a simple export).
This visibility builds transparency and trust between your agency and your clients. Plus, it’s a great way to subtly help clients see the true extent of the work being done on their behalf.
Choosing the right
pricing model for your agency
We've covered a lot of ground — so here's a snapshot to make sense of it all. This table compares each pricing model against the seven dials from earlier to spot which aligns best with your agency's goals and priorities.
Legend:
No pricing model is universally “best.” The right one depends on where your agency is today, and where you’re trying to go. Here’s a framework to decide what’s going to serve you right now — and what to keep in mind as you scale.
Flip the switches to see what pricing models are right for your agency
Recommended pricing model:
If you want high predictability to avoid feast-or-famine cycles, retainers and productized packages provide steady, predictable revenue streams with upfront payments or recurring billing.
5 sales tips for setting
and actually charging your new rates
Now you know how to price your services, here’s how to start charging what you’re worth. Get your bag! 💰💰 💰
1. Focus on uncovering your prospect's pain points
Many agencies treat sales calls as an opportunity to talk about themselves. Some create scripts for sales calls, or prep talking points. But remember, above all else, your job is to provide a valuable solution to your client’s problem. If you’re too wrapped up in delivering your pitch, you’ll miss the chance to uncover what your prospect actually needs.
Grey Matter takes a very interesting sales approach with their prospects, which might seem counterintuitive to some agency owners — they focus on objectives instead of scripts. Tony explains the logic, “I need to uncover certain things in the call, meaning I don't need to say stuff about us. I can send an email about that after the fact.”
Instead of jumping on the discovery call with a laundry list of questions and a 15-minute pitch about the company, focus on one thing — listening. By being genuinely curious about prospects' challenges, you’re already in a better place to solve them. And you can't charge premium rates for solutions to problems you don't fully understand.
2. Use calls to build rapport and give free value
Many business owners worry that “if I give the goods away for free, no one will pay for them.” But the willingness to offer free value actually positions you as more of an expert.
You know the saying — you get what you pay for. If you get on a call with a prospect and go straight into problem-solving mode (rather than selling), you’ll provide a ton of value up-front for free. Tony sees this from the client’s perspective: “If you're getting really good ideas when you're not paying us, imagine what you'll get when you do actually pay us."
Don’t be shy to riff on ideas or give value away upfront. Use discovery calls to focus on establishing rapport and giving value. These moments position you as a thought leader in your prospect’s eyes, making them trust you more and increasing the chances they’ll say yes to your premium offering.
3. Sell excitement and emotional wins
People buy with emotion, and then justify with logic. So, use this psychology to make people connect with your offering.
Grey Matter leans into this approach by selling to people based on anticipation. As Tony puts it, “We’re selling sports cars, not minivans.” People buy minivans because they’re functional, but they buy sports cars because they’re exciting.
Don’t talk about your team’s background, how many years of experience they have, or the latest software you use. Instead, focus on the dream outcome you can deliver to your prospect — the feeling of hitting revenue targets, the peace of mind from having experts handle marketing, and the pride in growing a successful business.
4. Aim for a quick deal closure
When a prospect shows you what they’re like to work with, trust them. If they’re indecisive in the sales process, they’ll mirror this behavior as a client.
Grey Matter has a rule — if a prospect takes more than three calls to sign a contract, they’ll kill the deal. An indecisive prospect probably isn’t sold on the value of your offer or perceives a low likelihood of success, according to Tony. He prefers to cut his losses than face an uphill battle with an unconvinced client.
Don’t be afraid to walk away from a stagnant deal. Not all revenue is created equal, and it’s okay to prioritize your profitability over your close rate.
5. Lean on solid time tracking data
A robust time tracking tool, like Toggl Track, provides essential insights into your actual costs, profitability by client, and historical project performance — all of which can rationalize your pricing decisions.
These systems:
- Identify which clients and projects are most profitable
- Spot inefficiencies in your delivery process
- Quantify scope creep to have data-backed conversations with clients
- Make informed decisions about when and how much to raise prices
Every component of Grey Matter's "toolbox" is priced up using the agency's historical time tracking and utilization data. No matter the client's request, they create a custom package that is time-estimated and priced to keep it profitable and in line with the company's financial goals.
Improve your project planning and profit predictions by using a time tracking tool to gain an accurate sense of how long your team spends on different tasks.
Speaking of which...
How and when
to raise your prices
Pricing is both an art and an iterative process. Your first pricing model won’t be your forever pricing model. As Tony wisely notes,
You should consider reviewing and raising prices yearly to account for:
A growing team: Each new team member changes your cost structure, especially as you add more senior talent. Your pricing needs to evolve accordingly.
Economic changes: As Tony emphasizes, “Inflation is real... if you want to give people raises, you're going to make 4% less money next year if you keep the same pricing.” Since the biggest cost at an agency is people, you need to account for these rising expenses in your pricing strategy.
“Hidden” costs: As your agency matures, you'll likely invest in more “back-office” costs, such as systems, tools, and more sophisticated marketing. That’s why tracking non-billable hours is critical to keep on top of these.
How to communicate price increases
Raising rates with existing clients is a daunting but entirely normal part of business evolution. There are several options:
Grandfathering: Keep long-term clients at their current rates. This rewards loyalty but creates significant revenue disparities as your client base grows.
Phased increases: Implement smaller, regular increases over time to gradually bring legacy clients up to current rates.
Service enhancements: Pair price increases with additional value or services to make the change more palatable.
Annual adjustment policy: Establish clear expectations about annual price reviews from the beginning of client relationships.
Whichever route you take, stay professional, transparent, and firm. Schedule calls to discuss the changes, reaffirm your value and address any concerns directly.
