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Agency value: What are we worth?

How do we define our value?

There’s no mistaking it, the cost of building a website or app is getting more and more difficult for customers to understand. Agencies are pricing their services all over the place. It’s quite complicated when customers do not submit a precise and detailed request for proposal, but it’s equally complicated when you have different types of agencies responding (big, small, independent, groups, etc). Agencies have been struggling to define the value of their work. It’s nearly impossible because the perceived value by the customer varies so much.

But we need more consistency. There is only one way to define a ‘base’ value for an agency.

Let’s repeat the formula:

Value = price / time

Where value is the price per day charged by the agency, price being the final price and time the amount of days (or hours) needed to accomplish the task.

We call it a ‘base’ value because eventually, after the customer has compared apples with apples, an agency may add at their discretion an extra cost if the perceived value allows it. Let’s say an agency often attempts to build amazing and unique websites, even if the time spent is the same as another agency, the agency may be able to charge a premium.

But that premium should be reflected in the initial cost per day. That will be where the greatest difference will lie.

Customers, of course, will tend to focus on the bottom line, i.e. the final cost.

What are
digital agencies
really worth?

Of course, many agencies will say that as the digital sphere develops rapidly, agencies are forced to invest more and more into quality, accessibility, performance, innovation, and compliance issues. These concerns take time, and yet the time and speed given to deliver seems to shrink (because the final price proposed seems to go lower, which is not necessarily true). Therefore agencies begin to feel that their value is decreasing in an ever evolving sector.

Agencies, therefore, need to go through a transformation themselves. Agencies scramble to offer new services linked to social media or APIs or future developments. Agencies strive for proximity and 24-hour availability to offer customers a complete package. But what else do agencies need to do?

Agencies are generally given a choice: keep doing what you’ve done before and standardised the processes and delivery channels, or invest in bringing added value to the client.

What is that added value? That is the ultimate question.

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