If you read our other piece about starting your own influencer agency—and now you’re reading this—it’s a fair guess that you weren’t scared off by all the work and knowledge required. You probably also noticed we left off one key detail: how much to charge. The short answer to this is: whatever you want! The longer answer follows this paragraph.
Understanding the pricing structure of influencer marketing agencies can be complex. The truth is we can’t tell you how much to charge—there are just too many variables to make a one-size-fits-all proclamation. Instead, we’ll explore the factors that influence pricing, break down the various phases of influencer marketing that incur costs for agencies, and identify profit-making opportunities. First, let’s go over some examples of typical pricing models to understand how an agency might invoice its clients.
Different Fee Structures of Influencer Marketing Agencies
Agencies typically provide a diverse offering of services, and they’ll charge for these services in one of three ways: fee-based, campaign-based, or commissions-based fee structures. A fourth option—going on a monthly retainer—is the goal for any agency looking for long-term stability, but these agreements are generally worked out after a successful relationship has already been established with a predictable set of services carried out each month. As a new-to-market agency, you should focus on the first three. Let’s break them down here:
Fee-Based Pricing
Fee-based pricing is a straightforward model where agencies charge a fee for their services and then bill upon completion. This fee is generally structured in one of two ways:
1. Hourly Rates
Some agencies bill by the hour for their time spent on campaign strategy, influencer outreach, content creation, and management. This model is typically used for smaller projects or consultations where the scope of work is less defined. Different hourly rates might apply to different services, or bundled rates can be offered, but this is the simplest fee to calculate once you’ve agreed upon a price.
2. Project-Based Fees
A more experienced agency or consultant will charge a fixed fee for specific projects. This might include a one-time campaign, or a la carte services such as content creation, market research, or a detailed strategy plan. Project-based fees are beneficial when the scope and deliverables are clearly defined. You as the expert know how long it will take you to complete and you can base your price off that. The bonus with a project-based approach is that you get more efficient at any task the more you do it. Your income will never go down just because you finish it a little quicker.
Pros Cons Predictable costs for clients. Steady income for agencies. Easy to understand and transparent. May not align with campaign performance. Potentially higher upfront costs for clients.
Campaign-based Pricing
Campaign-based pricing involves setting a fee based on the specific campaign's requirements. This usually means accounting for the various costs of the campaign and then adding some uplift/profit to the cost. This model is highly flexible and tailored to the unique needs of each campaign, while still making sure you stay within the client’s budgetary constraints. The costs breakdown to at least two of the following factors:
1. Influencer Fees
Influencers charge their own fees, and agencies pay them on behalf of the client. This fee can vary widely depending on the influencer’s reach, engagement, and platform. Agencies often mark up these fees to cover their sourcing and negotiation efforts.
2. Content Creation Costs
This only applies to agencies doing in-house creative or collaborations with influencers for clients. The costs can include the expenses for producing content, such as professional photography, video production, and graphic design. These costs are typically bundled into the overall campaign fee.
3. Management Fees
Agencies charge for the ongoing management of the campaign, including coordinating with influencers, scheduling posts, and monitoring performance. In some cases, this fee is simply calculated as a percentage of the total campaign budget. Otherwise, it’s a simple flat rate that’s tacked on to all the other costs.
Pros Cons Tailored to the campaign’s needs. Encourages comprehensive planning. Flexible and adaptable to different campaign scopes. Costs can fluctuate significantly. Requires detailed budget planning.
Commissions-based Pricing
For campaigns tied to specific revenue generating activities, agencies may choose to go with commission-based pricing. This ties the agency’s compensation to the performance of the campaign. Agencies earn a commission based on the results achieved. Any result can be monetized, but we typically see it apply to these three things:
1. Performance Bonuses
Agencies receive bonuses for exceeding predefined performance metrics. This incentivizes the agency to maximize campaign effectiveness. Performance bonuses aren’t necessarily tied to any sales or revenue, though they can be.
2. Sales Commissions
Agencies take a percentage of the sales generated from the campaign. This is a particularly common route to go for affiliate marketing and e-commerce collaborations. Both are easily trackable.
3. Lead Generation
This type of marketing result applies to non-retail businesses with prolonged sales cycles. The commissions can be based purely on the number of leads, or can be more specifically tied to those that become sales.
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Factors Influencing Influencer Marketing Agency Pricing
As we noted at the beginning of this post, we can’t really tell you how much to charge—there are simply too many variables and “ifs” to give a straight answer. That said, teveral factors contribute to the pricing of influencer marketing services, and it can be helpful to understand all the considerations—apart from what your time is worth—in determining costs:
- Campaign Goals — The objectives of the campaign—whether it’s brand awareness, lead generation, or sales—affect the pricing. More comprehensive campaigns with multiple goals tend to be more expensive.
- Content Type and Deliverables — The nature and volume of content required (e.g., posts, stories, videos) significantly influence costs. High-quality video production or a series of posts will cost more than a single Instagram story, which itself will cost more than an image or two with a caption.
- Platform — Different social media platforms have varying costs associated with influencer marketing. For example, Instagram, TikTok, and YouTube generally command higher rates compared to Twitter or Facebook due to their visual and engaging nature. That also makes them more popular platforms to begin with, which also contributes to a higher price.
- Influencer Tier and Reach — Influencers are categorized based on their follower count and engagement rate, and these values are relative to the channel they’re on (see above). Generally, influencers are divided into different categories, each one commanding more money than the one before it: nano (1K-10K followers), micro (10K-100K followers), macro (100K-1M followers), and mega (1M+ followers) influencers.
- Campaign Duration — Longer campaigns require more resources and management, thus increasing the cost.
- Agency Expertise and Reputation — Agencies with a strong track record and high expertise often charge premium rates for their services.
- Geographic Location — Influencer marketing costs can vary based on the location of both the agency and the target audience, with campaigns targeting US audiences typically costing more.
Breakdown of Influencer Marketing Phases and Associated Costs
Each of the variables listed above have a direct impact on how much your services might cost your clients. In this section, we’ll see what the different phases of a campaign might cost you. You’re on the hook for more than your time during each phase, so this will help you start thinking about other ways to find a profit.
1. Strategy Development
- Costs — Market research, competitive analysis, audience segmentation
- Details — This phase involves understanding the brand’s objectives, defining the target audience, and setting measurable goals. It often includes creating a detailed plan outlining the campaign’s approach.
- Profit Opportunities — Charging a consultancy fee for strategy development.
2. Influencer Identification and Outreach
- Costs — Subscription to influencer databases, manual outreach efforts, negotiation time
- Details — Agencies identify suitable influencers, reach out to them, and negotiate terms. This can be resource-intensive, especially if manual vetting is involved.
- Profit Opportunities — Markup on influencer fees, service charges for influencer sourcing.
3. Campaign Design and Content Creation
- Costs — Creative brainstorming sessions, graphic design, video production, copywriting.
- Details — Developing the content that influencers will share, ensuring it aligns with the brand’s message. High-quality production can significantly add to the costs.
- Profit Opportunities — Charging for creative services, any materials needed, content creation fees.
4. Campaign Execution
- Costs — Influencer fees, ad spend (if boosted posts are involved), platform-specific costs.
- Details — The actual rollout of the campaign across selected platforms, involving coordination with influencers and ensuring timely posting.
- Profit Opportunities — Agency fee as a percentage of the total campaign spend.
5. Monitoring and Management
- Costs — Tools for tracking engagement, dedicated account management time.
- Details — Real-time monitoring of the campaign’s performance, managing influencer relations, and ensuring compliance with the agreed terms.
- Profit Opportunities — Monthly management fees, premium charges for detailed analytics.
6. Reporting and Analysis
- Costs — Data analysis tools, report generation software.
- Details — Post-campaign analysis to measure the success against the set objectives. Detailed reports are created to showcase ROI and learnings for future campaigns.
- Profit Opportunities — Charging for detailed performance reports and insights.
Other Profit-Making Opportunities for Agencies
Influencer marketing agencies don’t have to be completely campaign focused to generate revenue. There are several opportunities to earn beyond the direct costs associated with each campaign phase, in the forms of other specialized services as a way to supplement your income.
For example, many agencies develop in-house software to manage their influencer relationships and campaigns. Some build theirs out to much that it becomes a product in its own right. While nothing can replace your expertise in crafting campaigns, a self-service platform for smaller companies that couldn’t afford you otherwise is a great way to get new “clients.”
We mentioned earlier that having a full service creative studio in-house isn’t a requirement, but it can give you a competitive edge. The studio needn’t be reserved for only the campaigns that your agency is managing. When you have a creative-only offering, you may end up serving other agencies or larger brands with in-house marketing teams.
Other valuable services you can offer—to clients and others—are workshops and training. Offering educational services to help people understand and leverage influencer marketing better is not only a possibly lucrative avenue to explore, it also helps to establish you as an expert worth listening to.
Conclusion
Influencer marketing agency pricing is a multifaceted issue, encompassing fee-based, campaign-based, and commission-based models, each with unique pros and cons. Agencies must consider various factors such as campaign goals, content type, platform, influencer tier, and duration to set appropriate rates. Additionally, profit opportunities arise from strategy development, influencer sourcing, creative services, and performance reporting. It’s a delicate balancing act to stay competitive while also maximizing your profit, but if you’re thoughtful about how you proceed, running your own agency can be very lucrative.
