In this episode of The Agency Accelerator, Ilia Markov from the time tracking management tool, Toggl, discusses the importance of time recording and how it will help agencies manage their capacity, productivity, and profitability.
We explore how time tracking is not just about billing clients, but is also a way to analyse where time is going, identify areas for improvement, and optimise operations.
We outline the metrics that should be measured, such as billable versus non-billable time percentages, and what constitutes too much billable time. Finally, Ilia emphasises that time tracking is not a tool for spying on employees, but rather to spot inefficiencies, identify early warning signs of burnout, and optimise work.
"The highest performing agency usually are somewhere in the vicinity of 75%, meaning 75% of a client facing employee's total time ends up on an invoice."— Ilia Markov
"Regardless of the pricing model that you use, it's important to understand how you are using your main resource...your people! It's very important to understand where their time is going and how it is used." — Ilia Markov
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I thought this episode on pricing, and specifically value pricing and value selling, was. Really pertinent right now, where we're all being pushed, and clients want more than ever. And there's a tendency for us too. Think that the best way to retain and win clients is by discounting or certainly not increasing our prices. So I really wanted to revisit the concepts of value pricing and value selling and give you some practical tips on how you can implement that in your agency so that you not only are charging the fees that you're worth but also ultimately have much better relationships with your clients because your pricing is aligned to the outcomes that your clients are looking for. So let's jump into this rewind episode and this value-packed episode on value pricing and value selling.
I'm Rob da Costa, and this is the agency Accelerator Podcast. As someone who has stood in your shoes, having started, grown, and sold my own agency, I know just how it feels in the ups and downs of agency life. So this podcast aims to ease your journey just a little by sharing mine and my guests' experiences and advice as you navigate your way to growing a profitable, sustainable, and enjoyable business. Everyone talks about the concepts of value pricing and value selling, and to be honest, it sounds really good in theory. But in reality, a lot of agencies don't know how to apply it or are too scared to start taking a value pricing approach. So they go back to their tried and tested ways of pricing on fixed project fees or selling on time. Now, in today's podcast, I don't want to talk too much about why you should be value selling.
I have a great free guide on. My website explains that, so go grab that if you want to learn more. But I want to give you five tips and strategies that you can start using to start moving towards value-based pricing and a value-based selling approach. So, another super practical episode and let's get on with the show. Now, before we jump into today's podcast, I wanted to let you know that today's episode is sponsored by my Masterclass three Ways to raise your agency's prices and profits without losing clients. I'm running this workshop four times this month if you're listening to this live or you'll be able to watch a replay. If you're not, so cheque out the link below and invest 60 minutes of your time to learn some practical strategies that you can start implementing straight away. Okay, on with today's show. Now, the best way I've ever found to explain what value pricing and value selling is to tell you a story about a toothache. So a few years ago, I woke up on Saturday morning with a bit of an ache in my jaw, and by Sunday I was in agony and paracetamol and so on. Didn't touch the site, so I managed to get an emergency appointment the next day with my dentist and I sat in the chair and they had to extract my tooth and really quickly because I guess I had an infection. It came out really easily and within 20 minutes my pain had literally gone from being an agony to nonexistent. And I went up to reception and they said, okay, that'll be 300 pounds, please. Now imagine if I'd have said blindly 300 pounds for 20 minutes. Work is a lot of money. Well, the dentist would have turned around and said, well, if I took 3 hours to get rid of your pain to 100 pounds an hour, would that make it more valuable? And of course, I said no, I just want to get rid of the pain. So that is a good example of selling on value and not on time. So the definition of value-based selling is pretty straightforward. Instead of just pitching your products or services alone, value-based selling focuses on how the product or service will provide value to the customer. The goal is to focus on the customer's needs so that they can make a decision based on the potential value they'll get out of working with you and you delivering your product or service. For example, if you are a web design agency, then you're not selling a ten-page WordPress website to your client, but rather you're helping them generate more leads or make more sales or improve their customers' journey. This is why having something like a bronze, silver and gold package, depending on the complexity or length of the website, is definitely not the right way to sell. Because you're selling outputs I-E-A website rather than outcomes I. E. More leads, more traffic, or more revenue. So let me share with you five strategies to start moving towards a value-based selling and pricing strategy. Now consider how you can start using these ideas. And remember, it doesn't need to be a revolution, just an evolution. So even if you implement just one of these, it will start making a change which will make it easier to charge higher fees and result in stronger relationships with your client. So tip number one, or strategy number one, is that from the very first conversation, you have with the prospects, focus on the outcomes they are looking for and then tie those outcomes back to their bigger business goals. Identify the transformation from being in pain to not being in pain, because clients will always pay a good fee to not be in pain any longer. And your job in the early conversations is to identify this pain and this transformation they're looking for. This means that you need to put the customer first and spend as much time in your prospect conversations. In fact, find mode before you start telling them about your agency and your products and your services. Now, brave agencies will spend 90% of their time in fact-find mode and only present their ideas and details about their agency or their products or service based on the information they found in the fact-finding stage. Gone are the days when you will have your company PowerPoint presentation that you are determined to go through by hook or by crook, and 90% of it is not relevant. Now, this is just good advice for any kind of prospect meeting you go on. Make it all about the client. Imagine going on a date where you spend all the time telling your potential partner about you and how wonderful you are. Your date would excuse themselves, disappear off the loo, and escape through the back exit, never to be seen again. So make sure that you're adding value each time you engage with your prospect to continually build trust and create that long-term positive experience and that relationship. This could look like making sure that you leave plenty of time to answer their questions in each meeting, not interrupting them when they're speaking, or even between meetings, sharing helpful articles or content that is relevant to their business. Even when you're not actively engaged in the sales conversation, the small steps you take to make your prospect's job easier will pay dividends in the long run. So that's tip number one. Strategy number two is to make sure that you understand how the wider business will assess the success of your campaign, not just the marketing resource that you might be dealing with. Now, this is because the marketing department might have a different set of goals for the wider business and how they will assess the success of your campaign. So you need to focus on both and also understand at this stage if their expectations are not realistic, or if they are, and if they're not, you've got the opportunity to realign them or walk away. Before you invest any time writing a proposal or preparing a pitch, strategy number three is that when you have agreed to write a proposal, make sure you're constantly referencing and referring back to the outcomes that the client is seeking from your intervention. This makes pricing so much easier for you to determine and is also much harder for the client to argue against. Talking of which, tip number four is to price on the outcomes. Now, this doesn't mean you're making any kind of guarantees or you're offering payment by results. It just means that you're getting everyone's mind focused on that transformation that the client is looking for, from being in pain to not being in pain. So, for example, if you're developing a new website for an e-commerce client and they want to increase their sales by 400,000 in the next year, well, then if you charge them 40,000 to design the website, that doesn't sound that much, and of course, that's going to deliver significant ROI. Whereas if you're just charging them on time and materials or the number of pages, the fee would likely be much lower and they could start arguing why certain tasks take so long or comparing one-page price to another. And that leads to discounting. So that leads me to tip number five, which is please, please don't discount if they want a lower fee. Discuss what aspects of the project you don't want to include. Just like if you wanted to pay a lower fee for the dentist, maybe they would remove something like the anaesthetic. And usually, just like the dentist, you wouldn't want to have anything removed. So discounting becomes a much harder conversation for your prospect to have with you. So there you go. Quick five tips that can help you move the conversation and your pricing strategy towards a value-based pricing and selling approach. I always tell my clients that pricing is 50% mindset and 50% application. So if you can start thinking about the value that you provide your clients and price accordingly, you're going to find yourself much more profitable and have much stronger relationships with your clients because you'll both focus on the same outcomes. So I hope you found this really quick episode useful. If you want to know more, then please do. Make sure you join me on one of the master classes that I mentioned, where we dig into value pricing in much more detail, as well as some other strategies that aligned with pricing that ultimately mean you can increase your prices, win more profitable business, and have stronger client relationships. Now as ever, if you enjoyed this episode, please consider leaving a review on Apple podcast because that helps the algorithm show the podcast to more people just like you, which means I can help more people. And of course, make sure you've hit the subscribe button so that you're alerted when a new episode is published every week. And if you're watching this as a video, then also please hit the subscribe button and the like button. And of course, I will see you next week for the next episode of the Agency Accelerator Podcast.