Pricing Social Media Services - A la Carte or Prix Fixe Menu Sir?

One of the hairiest challenges as an independent social media consultant (or an agency for that matter) is how to price social media services.

When I was a software consultant, that part was a lot easier. Why? Because given the time of year, the state of the market, and the type of client, I could pretty much pinpoint within 5% what the appropriate asking price might be. I knew exactly what software development went for on an hourly basis in my markets, and so I bid accordingly.

What's more, I always billed on an hourly basis (fixed cost billing is a dud), and I was always able to estimate time required to finish the job. The client typically understood what he was paying for, and what would be handed off at the end of the contract. Payment-wise, he also grasped the concept of hourly billing. Doctors, lawyers and mechanics bill that way - it's a fairly obvious concept. Unfortunately not so in the social media realm.

With social media, it's a whole different ball game. First, people don't readily understand what it is you can deliver (or how). Second, they don't understand when you price services "a la carte" - what do I mean by this? Well take a look at Mack Collier's How Much does Social Media cost companies in 2011? post here. It's a reference I always like to send prospects, as their first question often is: "How much is this gonna cost me?" - But now I'm thinking that's the wrong way to go about it.

Mack's menu comprises the "usual suspects" of a social media meal. Namely, a blog, associated content, Twitter, Facebook, and strategy/roadmap plan. Then he throws in an hourly rate window, training, and auditing. So far so good. I happen to think his numbers are actually on the money and consistent with what I've seen around here from agencies. So let do a little math now, taking averages on his "Most Charge" numbers:

Blog from scratch with content: $4,000/mo
Blog from scratch with some content: $2,750/mo
Existing blog enhancement: $3,000/mo
Blog posts: $250/post

Twitter from scratch: $2,000/mo
Existing Twitter  enhancement: $1,750/mo
Existing Twitter coaching: $1,750/mo

Facebook page launch and management: $3,750/mo
Facebook page launch $3,000/mo

Social media strategy: $5,500/mo
Social media strategy (limited outsourcing): $4,500/mo

Social media strategy audit: $3,500

Social media consulting: $137.50/hr
Social media training: $535 - $875/hr

Now let's just take some averages for each activity - just to get a ballpark:
Blog: $3,000/mo
Twitter: $1,750/mo
Facebook: $3,000/mo
Strategy: $5,000 (per month, but one month per year should suffice)
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Total: $12,750 first month, then $7,750 each additional month.

Let's assume further (it's more a fact than an assumption) that a successful social media program needs to be continued for a period of at least one year to have the slightest chance of success. This brings your total basic yearly costs to $12,750 + 11 * $7,750 = $98,000 over the first twelve months. Naturally, this is a very basic estimate but it's in the ballpark if you ask me.

Yes, you'll have additional costs. Maybe other networks to leverage (Youtube, LinkedIn, etc) , probably some live eventing, photo/video work, SEO, Facebook campaigns, monitoring, analytical tools, content generation, and let's not forget mobile! All in all I typically estimate around $150,000/year minimum. Which, if you think about it, is around what you'd spend bare bones on a well-equipped full time employee doing everything internally (without a huge paycheck).

Remember now, this doesn't include more than the very basic stuff. It also assumes your strategy calls for a blog, Facebook and Twitter presence (typical, but not a sine qua non rule). Now, of course, not every client will need the full Monty. Especially if said client already has a social media presence - in which case he may just need an additional component, or some enhancements to an existing platform. But in my experience, those are the exception. The typical client I see is starting from scratch - with maybe a foot in the water, but barely.

And this client, struggling to price his total investment cost, doesn't particularly care what Blog, Facebook or Twitter management will cost him individually. Nor does he really understand (or care about) the difference between them. The client typically has a simple goal: build mindshare, increase sales. And he wants a "big picture" number. With a handle on his monthly costs. And typically, he also wants someone to handle all of this for him, without having to deal with Peter or Paul (and pay each separately) for various areas of work and/or expertise.

This is why, in my opinion, billing (and trying to justify) a la carte pricing is self-defeating for social media consultants - specifically in the luxury industry. It makes better sense to work with a holistic, "full package" approach. Not only is it simpler to grasp, but it also corresponds to what social media is all about. It's not a shot in the water here and there. A touch-up here, and an experiment there. A successful social media program (and consultant) needs to have a big picture approach. Holistic and turnkey. All the pieces must  connect and work together seamlessly and coherently.

Trying to save some cash by doing "just a little piece" here and there is not a strategy, in my opinion. It's a waste of money with poor outcome probabilities. Not something you want to get involved in. This is why from now on, unless the project is very specific and focused or targeted (as in, an analysis of existing state, or a strategy proposal), I offer "turnkey" packages where I handle everything together in unity - bringing other teams and competencies in if required. But always "nurturing the baby" from a 360 perspective.

How about you? What's your experience been like? Inquiring minds want to know :)