🚀 TL;DR
- Scaling headcount to sell hours caps profit; the sustainable path is choosing pricing models that decouple revenue from time and reduce scope chaos.
- Tiered packages (3 levels) and outcome-focused retainers are the primary, scalable models; use tightly scoped projects as entry points only.
- Value-based pricing sounds great but usually creates friction; most agencies don’t need it if they target the right Lighthouse Clients and price tiers/retainers well.
- Performance-based, credit-based, hourly, and day-rate models shift risk to you, add complexity, or punish efficiency—use rarely (if ever) and only with clear controls.
- Layer simple digital products as add-ons to increase leverage, but don’t let them distract from your core services or become a second business.
I had a $296,463.65 / month payroll when I owned my agency.
Sounds impressive until you realize how the bigger my agency became, the less that stayed in my pocket. Between salaries, overhead, and the constant pressure to hit payroll, I ran a very expensive hamster wheel. I know you can relate.
The pricing model for most agencies is broken. Many agencies charge hourly rates or sell project. Which means your revenue ceiling is directly tied to how many billable hours you can squeeze out of each week.
Want to grow? Hire more people. Want to make more? Work longer.
I call it “The Hungry Dragon”...more people, more clients, more people, more clients. The math looks simple, but the lifestyle is unsustainable.
Early on, I started questioning everything about how agencies price their services. That’s how I got to $5M / yr, making my high payroll costs inconsequential.
In this guide, I'm breaking down the most common agency pricing models and showing you which ones work for sustainable agency growth.
1. Tiered pricing model
This is where you package your services into clear levels—typically three tiers with an intro, core, and premium option. Each tier includes specific outputs and outcomes. You help prospects choose based on their budget and needs.
For example, a content marketing agency might offer:
- Starter: 4 blog posts per month, basic SEO optimization, monthly performance report ($3,000/month).
- Growth: 8 blog posts, advanced SEO, email marketing support, bi-weekly strategy calls ($6,500/month).
- Premium: 12 blog posts, full content strategy, email sequences, social media management, weekly access ($12,000/month).
The beauty of tiered pricing packages is psychological. You're not asking "Do you want to work with us?" You're asking, "Which level fits your goals?"
Pros and cons
Do I recommend this model?
Yes, with caveats.
Tiered pricing is one of the best ways to create scalable offers. It removes constant negotiation and trains clients to see your services as productized rather than custom.
The non-negotiables:
- Be ruthless about scope boundaries—no "just one more thing" additions.
- Stick to three tiers maximum to avoid decision paralysis.
- Make your middle tier the ideal engagement, priced profitably.
- Create a limited lower tier and a premium tier with strategic access.
When done right, you scale revenue without scaling hours proportionally.
2. Retainer pricing model
Retainer-based pricing means clients pay a fixed monthly fee for ongoing access to your services. Unlike project-based work with a defined end date, retainers create recurring revenue and long-term client relationships.
A typical retainer agreement might look like this:
A growth marketing agency charges $8,500/month for a retainer, including ongoing SEO work, monthly content creation, conversion rate optimization, and a set number of strategy hours. The client commits to at least six months.
The relationship isn't transactional. You're embedded in their business, acting more like an extension of their team than a vendor.
Pros and cons
Do I recommend this model?
Absolutely, if you're selective.
Retainers work best when there's a genuine ongoing need—anything where work compounds over time. They're terrible for one-time deliverables.
The mistake most agencies make? Offer retainers to anyone willing to pay monthly, then scramble to justify the fee with busywork.
Smart retainer pricing is outcome-focused, not hour-focused. If a client pays you $10K/month and you generate $100K in additional revenue for them, nobody cares if you worked 20 or 60 hours.
What makes retainers work:
- The stability lets you invest in better tools and hire strategically
- You stop living deal-to-deal
- You build deeper strategic relationships
But you need discipline to fire retainer clients who aren't a fit. One demanding, low-margin retainer drains your entire team's energy.
3. Project-based pricing model
Project-based pricing means you quote a fixed fee for a defined scope of work with clear deliverables and a timeline. Once the project ends, so does the engagement—unless the client hires you for another project.
For example, a sales agency charges $25,000 for a three-month market entry testing campaign with defined deliverables around lead qualification and appointment setting.
The appeal is simplicity. Both sides know exactly what's being delivered and what it costs.
Pros and cons
Do I recommend this model?
Infrequently, and not as your main pricing structure.
Project-based pricing works when there's a super tight scope of work. It's terrible when clients waffle, want a ton of changes, or generally like a lot of flexibility.
What makes it work:
- Ruthless scoping and ironclad client contracts.
- Define exactly what's included and what triggers additional fees.
- Build a buffer for reality—things always take longer than expected.
The other challenge is the sales cycle. You finish a project, celebrate, then start prospecting all over again. Most successful agencies use project-based pricing sparingly as an entry point, then convert clients to one of the other models.
I don't love it as a standalone model, but it has its place for specialized deliverables and more clearly defined engagements
4. Value-based pricing model
Value-based pricing means you charge based on the economic value you create for the client, not the hours you work or the deliverables you produce. If your work generates $500K in new revenue, you might charge $75K—regardless of whether it took you 40 hours or 400 hours.
This is where pricing becomes strategic instead of transactional.
Pros and cons
Do I recommend this model?
Almost never.
While many agencies believe value-based pricing is the holy grail, it creates unnecessary friction on both sides of the sales process.
First, in my decades of experience, prospects and clients hate this approach. You then lose early goodwill by trying to explain why you are going to charge them.
More importantly, the majority of consultants and founders will not need this approach if they properly target clients. When defining your “Lighthouse Client,” you will already know the value you create and capture for them.
You then can sell them into either tier or retainer-based pricing model using a scalable offer.
The reality? Most agencies don’t need this approach.
You should instead focus on:
- Clear metrics tied to business outcomes (revenue, cost savings, customer acquisition).
- Confidence to have pricing conversations about outcomes, not deliverables.
- Social proof to prove you can deliver the promised results.
- Clients mature enough to use the tier or retainer-based model.
5. Performance-based pricing model
Performance-based pricing ties your compensation directly to results. You might charge a base fee plus success fees when specific metrics are hit—or go fully commission-based, where you only get paid when the client wins.
For example, a Meta Ads agency takes 20% of ad spend as their fee, but only if they hit the target cost-per-acquisition.
The appeal is obvious: complete alignment between agency and client success. If you win, everyone wins.
Pros and cons
Do I recommend this model?
Rarely, and never as an initial engagement. I typically only recommend this approach as a follow on to a client you’ve worked with and know well.
Performance-based pricing sounds excellent in theory. In practice, it puts all the risk on you while giving you limited control over outcomes.
I've seen this model destroy agencies. You do great work, but the client's product is terrible, or their sales team doesn't follow up—and suddenly you're working for free.
When it might work:
- You know this client and already have a productive working relationship.
- You have significant control over the metrics (like direct ad management or link building).
- The client is already successful, and you're optimizing, not building from scratch.
- You structure it as base fee + performance bonuses, not pure commission.
- You are doing well, have cash reserves, and are OK if performance takes time to materialize.
If you’re willing to take on performance-based fees, it should be icing on the cake and not be required to hit your numbers.
6. Credit-based pricing model
Credit-based pricing packages your services into "credits" that clients can spend however they want within defined parameters. Think of it as buying a block of hours but being more flexible.
A marketing agency sells 100 credits for $10,000. Each service has a credit cost:
- Blog post: 5 credits
- Email sequence: 10 credits
- Social media campaign: 15 credits
- Strategy session: 8 credits
Clients use credits as needed throughout the contract, giving them flexibility without constant re-negotiation.
Pros and cons
Do I recommend this model?
No.
Credit-based pricing tries to solve a problem that better pricing models already address. If you want flexibility, offer tiered packages with defined services. If you want predictability, use retainers with a clear scope.
The credit model adds unnecessary complexity. Clients spend mental energy calculating credit costs instead of focusing on outcomes. Your team spends time tracking credit balances instead of delivering great work.
Even then, I'd rather see you build clear packages or retainer agreements. The agencies I know using credit models spend more time managing the credits than they'd like to admit.
7. Hourly pricing model
Hourly rate pricing is exactly what it sounds like: you track time spent on client work and bill accordingly. Many agencies start here because it feels safe and transparent.
A digital agency charges $150/hour for junior team members, $250/hour for senior strategists, and $350/hour for specialized work. Clients get invoices with detailed time breakdowns.
This is how traditional consulting firms and law offices operate. It's also how you guarantee you'll never scale beyond your team's available hours.
Pros and cons
Do I recommend this model?
No. Not for agencies trying to scale.
Hourly pricing is a trap disguised as simplicity. Every hour you work is an hour you bill, which sounds reasonable until you realize you've built a business model that rewards inefficiency and punishes expertise.
Think about it: you develop a faster way to solve client problems, and your reward is...making less money.
Although it’s hard to justify it, here’s when hourly rates make sense:
- You're just starting and haven't built enough social proof for other pricing models.
- The scope is genuinely unknowable (rare, but it happens) and you also want to assess a client first.
Even in those cases, I'd rather see you do a project-based pricing model with a defined discovery phase, then convert to retainer or tier-based pricing.
8. Day rate pricing model
Day rate pricing is hourly pricing's cousin—you charge a flat fee for a full day of work rather than tracking individual hours. Common in consulting, creative services, and fractional executive roles.
A brand strategy consultant charges $3,500 per day for workshop facilitation and strategic planning. A fractional CMO charges $2,000 per day for embedded work with a client's marketing team.
The math is simple: agree on a day rate, book the days, show up, and deliver value.
Pros and cons
Do I recommend this model?
Only for specific situations, not as your primary model.
Day rates work when you're selling access to yourself for intensive, high-touch engagements—workshops, strategy sessions, fractional executive work. They're better than hourly rates because they eliminate time-tracking theater.
But they're still fundamentally trading time for money.
Where day rates make sense:
- You're a solo consultant or fractional executive going onsite with a client for a day.
- You're running workshops or facilitations that genuinely require full-day presence.
- Your expertise is your time, not a system or set of outcomes.
The problem is the same as hourly rates: your revenue ceiling is determined by available days.
For agencies specifically, day rates don't work well. You're selling team output, not individual days. Use retainers, project fees, or tier-based pricing instead.
If you must use day rates, position them as premium add-ons to existing retainer relationships—not your core pricing structure.
9. Add-on digital products
This isn't a pricing model—it's a revenue multiplier. You create templates, SOPs, frameworks, or tools that complement your core services. Then, sell them as standalone digital products or include them in premium packages.
For example, a sales agency creates a "Pipeline Accelerator Kit" with templates for email sequences, call scripts, and CRM setup guides. They sell it for $4,500 or include it free with retainer clients.
They're meant to enhance it while creating leverage.
Pros and cons
Do I recommend this model?
Yes, as a complement—not a replacement.
Digital products work best when they're extensions of your core expertise, not distractions. I've built multiple businesses using frameworks and systems that became valuable intellectual property.
The mistake agencies make is treating digital products as a separate business. They create a course, then wonder why it's not selling while their service business stagnates.
Smart approach:
- Build products from work you're already doing (turn client deliverables into templates).
- Use them as Offer Magnets or entry points into higher-ticket services.
- Include them as value-adds in premium packages.
- Keep them simple—don't build a complicated course no one will watch when you already have a framework clients love.
The pricing model you actually need
I've run multiple seven-figure businesses using different pricing models. The one that changed everything? Moving away from hours entirely.
Most agencies I work with need to stop mixing models randomly and commit to one primary approach:
- If you want predictable revenue and advisory client relationships: retainers.
- If you have clearly defined clients: tiered packages.
- If you want to kickstart a new client with a well-defined scope: project-based pricing
Then, layer complementary revenue from digital products or premium add-ons.
Today's pricing decisions determine whether you're building a scalable business or an expensive job tomorrow. Choose accordingly.
