One of the reasons so many of you read Social Media Explorer, or so I’m told, is that I have developed a reputation of someone who gives honest assessments. It might be a review of a social media marketing tool, a critique of a company’s social media marketing programs or campaigns or even reaction to a hot topic in the social media and digital marketing space. I’m honored to have earned your trust in that regard and hope to continue providing as unfettered and unbiased opinion as I can.

An area I’ve grappled with over the course of writing about the various vendors and tools that might help you with your social media marketing efforts, however, is pricing. Some very useful tools, like social media monitoring entry SocialMention.com are free. On the other end of the social media monitoring spectrum, you have tools that offer much more in terms of features and functionality. Some even cross into the category of market research tool or social media measurement instrument. Access to these requires considerable investment. As such, I have referred to them as, “expensive.”

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But that is a judgement call. I personally can’t afford hundreds of dollars per month for a social media monitoring solution like Sysomos, a consumer research tool like Consumer Base (SME partner) or even a robust monitoring/measurement/research instrument like Collective Intellect. But these tools aren’t meant for individuals. Nor are they meant for a social media consultancy. Their customers are companies with marketing budgets who value the information gleaned from the tools at levels an individual can’t fathom. A $500 monthly investment ($6,000 per year) is great value to a medium sized business with a $250,000 marketing budget that needs to know what people say about them online and respond to that accordingly.

Several friends of mine have lamented the frustrations of pricing themselves. Consultants like me aren’t taught how to value our own services in college. At the least, we’re guessing. At best, we put some thought and research into pricing and come up with a value statement: An hour of my time, based on the knowledge and experience I bring to the table, is worth X dollars.

When I left Doe-Anderson, I took its blended rate and added a few dollars per hour thinking my services and knowledge were in short supply. I should be paid more than the average hourly rate for a marketing worker. I took into account that pricing in Louisville is different than pricing in New York, San Francisco or Los Angeles and that my ideal customers (medium- to large-business) were in short supply in my city.

One of the first people I disclosed my hourly rate to (a public relations account manager in town) laughed at me. “You can’t charge that in Louisville!” But I wasn’t charging that in Louisville. My customers were, for the most part, elsewhere. Later, I found out what a friend and reasonable comparable consultant was charging per hour. It was almost double my rate. My prices went up.

Is public relations counsel worth $85 per hour? It is in Louisville. Is digital marketing work worth $150 per hour? It is in Chicago. Is strategic counsel worth $250 per hour? It is in some market, somewhere. Is social media marketing counsel worth $350 per hour? Is an industry analyst’s insights really worth four figures an hour? Not for some companies, but absolutely for others.

Now that I’m working on an online learning community and product, pricing has again perplexed me. What is the value of access to expert-level advice on digital and social media marketing? Many people would answer, “zero dollars,” because with Google and the right connections on Twitter, you can probably get a decent answer to your question. But what if that community came with robust content? Is it worth something then? To you, perhaps not. To fellow social media compatriots of mine, certainly not (and some are rolling their eyes at me for trying). But to my Aunt Suzanne who is tech averse and wants to learn how to use social media tools more effectively for both personal and business reasons, it’s worth a little investment. I’m ready to gamble there’s more of her than there are of my eye-rolling friends out there.

But is it worth $9.99 per month? $9.99 per year? $99.99 per month or year?

For $300 per month, you can learn from the best SEO minds around. For $47 a month and a $97 sign-up fee, you can get access to some great marketing seminars and an active forum community built around the notion that marketing doesn’t have to be sales and sales doesn’t have to be sleazy. For as low as $14 per month, you can use a tool that builds web forms, surveys and the like for you. Access to all that information, or the skills required to build the end product, is available online for free if you go looking for it. (Note: All links in this paragraph are affiliate links. I like cheeseburgers.)

At the end of the day, the price of something is not just what you have to pay. It’s the suggested value of that product or service to most of the people that product or company believes will buy it. If you don’t like the price, perhaps it wasn’t meant for you. If you need the service later in life and your circumstances change (you have more income, your department has built a budget for such an animal, etc.), maybe you’ll like the price just fine.

How do you tackle pricing for your product or service? What questions do you ask your customers to understand what their comfort levels are? What about vendors you use or software subscriptions you sign up for? I don’t want to know how you justify the price, I want to know how you determine the value of a particular tool or service. The comments are yours.

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About Jason Falls

Jason Falls

Jason Falls is a leading thinker, speaker and strategist in the world of digital marketing and is co-author of two books, No Bullshit Social Media: The All-Business, No-Hype Guide To Social Media Marketing and The Rebel's Guide To Email Marketing. By day, he leads digital strategy for Elasticity, one of the world's most innovative digital marketing and public relations firms. Follow him on Twitter (@JasonFalls).

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Comments & Reactions

Comments Policy

Comments on Social Media Explorer are open to anyone. However, I will remove any comment that is disrespectful and not in the spirit of intelligent discourse. You are welcome to leave links to content relevant to the conversation, but I reserve the right to remove it if I don't see the relevancy. Be nice, have fun. Fair?

  • http://twitter.com/themarketingguy Jay Ehret

    Jason, Both the customer and the business often struggle with the same thing: How much should something cost? Both sides need context, which you have provided here. As you learned early on, it's often better to start higher than you think you should. It's much more difficult to raise prices for potential customers than to lower them.

    But many times we place too much emphasis on price and not enough of our effort on value. If price were the primary purchasing factor, only the lowest priced services would have the greatest market share. In the end, what customers really want to know that they are getting more value than the price they are paying.

  • Prersi

    I will suggest pricing it in terms of the benefit your one hour service delivers to the customer. Try to calibrate what profits or benefit you will deliver to her and then price it accordingly. This must work well at least when your aunt is using your advice for business purposes. For personal ones, you may try some combinations of service level and pricing to gauge how she and other customers trade off between these two. Then based on that decide the highest you can charge.

  • http://flavors.me/40deuce 40deuce

    Interesting piece Jason.
    It's true that a tool like ours is not priced for the individual, but that said, the amount of data that our system can provide is also (usually) more than an individual needs. I know that if I wasn't working with Sysomos I would be interested in using it for myself personally, but I really wouldn't need that type of power on my own (nor could I afford it).
    For a lot of small companies just using free tools can be enough, and I will gladly tell anyone that rather than try to sell Sysomos to everyone. Some companies that have a small social media presence and not a lot of talk going on about them can get by more than fine with google alerts and a few other free tools. I usually tell people that the right way to decide if they need a larger and more in depth solution is if the time it takes to go through all your social media activity takes more time and energy than it really should. I've heard of people who spend all their work day going through these things and then having to go home and do the rest of their work all night because the social stuff took up too much time.
    It essentially comes down to the concept of Time vs Money. If you're not making enough money with the other things you do because all your time is going into reading google alerts and searching Twitter, etc. than a product that helps to make that all easier is definitely worth the money. However, if only takes you 5 mins to see all the previous days social activity and apply numbers and measurements to it, than a larger priced tool like Sysomos may not be worth it to you.
    That's my opinion on the subject anyways.

    Cheers,
    Sheldon, community manager for Sysomos (http://sysomos.com)

  • http://www.smartcollegevisit.com Zkellyq

    Jason, as a long-time freelancer and, now, an entrepreneur, I have struggled with these same issues regarding cost vs. value. Lately, I've been gleaning business advice from Rick Harrison, star of the History Channel's “Pawn Stars.”

    In a dealing the other day, he said these words to someone he was negotiating with, “Hey, I gotta make money every day.” Powerful words, but, even more powerful–the seller understood where Rick was coming from. A fair price was reached. Deal was done. As I turned away, it occurred to me why would anyone want to do business with me if I was not in the business to make money? If I'm doing my job right, then my success is my client's success — after all, we both gotta make money every day.

    • http://socialmediaexplorer.com JasonFalls

      Great perspective! Thanks for sharing that.

  • http://www.info2dw.com Menisa Lindra

    thanks Jason for adding new concept and knowledge into my head :) it was really interesting to read this blog and to know about price and value about which I had never thought in my whole lifetime. :)

    • http://socialmediaexplorer.com JasonFalls

      Thanks. Glad to be useful!

  • http://www.whoisbid.com Whoisbid

    I live in a part of the world where speed is one of the most important factors. I think people can charge much more for these types of clients if they are able to deliver results faster than others. I see the example of Google Adwords offering immediate results. They obviously know about these people who cannot wait.

  • John Giles

    Has anyone or any organization done a study about pricing social media? What are social media practitioners charging to set up social media for companies? What is the charge to do the monthly maintenance and posting? The customer engagement and monitoring? The measuring? I have clients wanting me to provide a package price for doing this. Where can you go for social media pricing information? Thanks.

    • http://socialmediaexplorer.com JasonFalls

      Hey John. Great questions. While this is certainly not a standard example,
      Jay Baer actually publishes his prices here:

      http://www.convinceandconvert.com/social-media-consulting/

      But Jay Baer is a national expert focused on helping agencies, firms and big
      brands. So the fees are a bit out of whack for what a local or small
      business consultant might charge.

      I’ve always tried to think of it based on the market-bearable hourly rate.
      In Louisville, most agencies charge a blended rate of about $150 per hour
      for all their services. Proofreading might be $50 per hour, the strategists
      might be $250 per hour, but in the end, the blended rate lets clients do
      quick math and know what they’re getting.

      When I went out on my own, I charged $200 per hour. After working with
      several colleagues charging a lot more and seeing that my focus was more on
      national brands than local ones, I ramped that up and now charge between
      $300 and $350 per hour (close to Jay’s but not quite as much, even though
      many people put us in the same general category of consultant.)

      But I know some folks doing the execution, etc, here in Louisville who are
      happy charging $75 per hour. It depends on your target customer and what the
      market will bear.

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