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paul roetzer (@paulroetzer)
Point PricingTM
An Inside Look at PR 20/20’s Value-Based Pricing Model
HubSpot	
  Partner	
  D...
I spent the first six years of my marketing agency
career chasing hourly quotas instead of results.
@paulroetzer
“Strive for 5”
@paulroetzer
Yes, we cared if the client was happy and successful, but 

the fundamental economic driving force behind the 

firm's exis...
I discovered early on that the billable-hour model 

was a flawed, archaic, agency-centric system 

that wrongly tied agenc...
In 2004, four years into my career, 

I became highly motivated 

to build a more efficient 

and profitable solution 

that ...
The idea was centered on making services tangible, 

with clearly defined costs, features and benefits, 

almost like buying...
My theory was that if clients 

understood exactly what they were getting,

and agreed ahead of time what it was worth, 

...
The problem was that the billable-hour model 

was the only one I had ever known.
@paulroetzer
How would I build an entirely new financial model and

productize a service business?
@paulroetzer
“The guiding principle was that set prices had to be
value based, meaning they were to be determined
based on perceived an...
value-based pricing
@paulroetzer www.pr2020.com
estimated hours (at peak efficiency)

perceived value

builder vs. driver

hourly revenue target

costs

loss leader

servic...
the price of inefficiency
a press release
Professional A
Hourly rate = $150

Hours to complete = 3

Cost = $450
@paulroetze...
the price of inefficiency
a press release
Professional B
Original draft ($150/hr) = 5 hrs or $750

Sr Assoc edit/review ($2...
The agency, not the client, should pay for 

professional development and inefficiencies.
@paulroetzer www.pr2020.com
inefficiency factors
distractions
@paulroetzer www.pr2020.com
inefficiency factors
time tracking
@paulroetzer www.pr2020.com
inefficiency factors
motivation
@paulroetzer www.pr2020.com
builders are recurring
campaigns designed to
create and expand assets
@paulroetzer www.pr2020.com
image:	
  Pedro	
  Moura	
  Pinheiro
drivers are campaigns designed to
capitalize on existing assets to
accelerate success...
origins of the point pricingtm model
@paulroetzer www.pr2020.com
2006
@paulroetzer www.pr2020.com
2008
@paulroetzer www.pr2020.com
2010
@paulroetzer www.pr2020.com
Started working on a marketing intelligence engine in early 2012.
@paulroetzer www.pr2020.com
Marketing Score became the m...
Looked to agile development models 

for inspiration on building software 

and standardizing recommendations 

using arti...
“Lean thinking defines value as providing benefit
to the customer; anything else is just waste.”
“As in any lean transformat...
In practice, many teams use a relative size measure such as
story points or ideal days.

In Scrum, it’s not about how much...
Epics, Stories and Sprints were too abstract,
so we simplified the concepts for marketers.

Epics = Projects 

Stories = Ta...
the value metric
@paulroetzer www.pr2020.com
source: Price Intelligently
@paulroetzer www.pr2020.com
a value metric is a pricing unit that aligns
with the value you create for customers.
@paulroetzer www.pr2020.com
eggs = eggs
@paulroetzer www.pr2020.com
@paulroetzer www.pr2020.com
@paulroetzer www.pr2020.com
@paulroetzer www.pr2020.com
@paulroetzer www.pr2020.com
@paulroetzer www.pr2020.com
@paulroetzer www.pr2020.com
2010
@paulroetzer www.pr2020.com
2014
Copyright © 2015 PR 20/20.
Point PricingTM is a PR 20/20 trademark. All rights reserved.
@paulroetzer www.pr2020.com
inside the point pricingtm model
@paulroetzer Point PricingTM is a PR 20/20 trademark. All rights reserved. www.pr2020.com
(it’s our value metric)
a point is a fixed unit of value.
@paulroetzer www.pr2020.com
Point PricingTM ensures clients get the full
value of every dollar spent, regardless of
how much time it takes to deliver....
Each project within a campaign is assigned a
fixed-point total (e.g. blog post = 3 points) based
on value creation rather t...
drivers
40% builders
60%
sample monthly gameplan
@paulroetzer www.pr2020.com
sample content campaign
ebook (35)

landing page (2)

blog post (3)

3-part email nurturing (6)

template social updates (...
www.pr2020.com
every campaign is a series of projects designed to achieve a goal
sample campaign center
@paulroetzer www.p...
www.pr2020.com
sample campaign center
@paulroetzer www.pr2020.com
www.pr2020.com
sample campaign center
@paulroetzer www.pr2020.com
sample point pricing value chart
Standard Point Pricing project value charts are built into online client centers
@paulroe...
assigning point values
Agencies can’t accurately predict hours due to variables
such as professional competency, focus, effi...
assigning point values
The sequence represents a set of numbers that increases
roughly based on a fixed ratio of 1.618—the ...
We’re still very early in the process, 

with significant iterations in the works . . .
@paulroetzer www.pr2020.com
But we can already see positive impact on productivity,
accountability, client performance, agency growth and profits.
@pau...
considering a pricing model transformation?
@paulroetzer www.pr2020.com
pricing model considerations
What are the weaknesses of your current model?
@paulroetzer www.pr2020.com
pricing model considerations
What are the agency (and client) goals for the new model?
@paulroetzer www.pr2020.com
pricing model considerations
What services does your agency provide that can be
standardized (i.e. description, scope, pri...
pricing model considerations
What is your agency’s value metric?
@paulroetzer www.pr2020.com
pricing model considerations
What is the price per X (X = your value metric)?
@paulroetzer www.pr2020.com
pricing model considerations
Does the price per X vary based on service package level?
@paulroetzer www.pr2020.com
pricing model considerations
Should you publish your pricing?
@paulroetzer www.pr2020.com
pricing model considerations
Will the model work within your existing 

project management, time tracking and accounting s...
pricing model considerations
Are there options to beta test the model?
@paulroetzer www.pr2020.com
pricing model considerations
How and when do you introduce the new pricing model to clients?
@paulroetzer www.pr2020.com
pricing model considerations
How do you ensure loyal clients receive equal or
greater value in the new model?
@paulroetzer...
pricing model considerations
How do you benchmark and monitor impact on performance—
clients, agency and personnel?
@paulr...
“The future belongs to dynamic agencies with more efficient
management systems, integrated services, versatile talent,
value...
paul	
  roetzer,	
  @paulroetzer	
  
CEO	
  |	
  PR	
  20/20	
  
creator	
  |	
  MarkeCng	
  Score	
  &	
  MarkeCng	
  Age...
Point Pricing: An Inside Look at PR 20/20's Value-Based Pricing Model
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Point Pricing: An Inside Look at PR 20/20's Value-Based Pricing Model

In early 2014, PR 20/20 began rolling out a proprietary, value-based pricing model—Point Pricing.

Point Pricing ensures clients get the full value of every dollar spent, regardless of how much time it takes to deliver.

A point is a fixed unit of value, it is PR 20/20's value metric. Each project within a campaign is assigned a fixed-point total (e.g. blog post = 3 points) based on value creation rather than hourly estimates.

Points are allocated by campaigns and goal type (i.e. brand, leads, sales, loyalty), and therefore always tied to performance.

Points provide total transparency into pricing, progress, performance and resource allocation.

This deck was presented at HubSpot's 2015 Partner Day.

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Point Pricing: An Inside Look at PR 20/20's Value-Based Pricing Model

  1. 1. paul roetzer (@paulroetzer) Point PricingTM An Inside Look at PR 20/20’s Value-Based Pricing Model HubSpot  Partner  Day   May  20,  2015 Paul  Roetzer   @paulroetzer   Founder  &  CEO  |  PR  20/20   Creator  |Marketing  Agency  Insider   Author  |  The  Marketing  Performance  Blueprint  (2014)  &   The  Marketing  Agency  Blueprint  (2012) Copyright © 2015 PR 20/20. Point PricingTM is a PR 20/20 trademark. All rights reserved.
  2. 2. I spent the first six years of my marketing agency career chasing hourly quotas instead of results. @paulroetzer
  3. 3. “Strive for 5” @paulroetzer
  4. 4. Yes, we cared if the client was happy and successful, but the fundamental economic driving force behind the firm's existence, and my career potential, was the billable hour. @paulroetzer
  5. 5. I discovered early on that the billable-hour model was a flawed, archaic, agency-centric system that wrongly tied agency performance to outputs, not outcomes. @paulroetzer
  6. 6. In 2004, four years into my career, I became highly motivated to build a more efficient and profitable solution that shifted the focus to client needs and goals. @paulroetzer
  7. 7. The idea was centered on making services tangible, with clearly defined costs, features and benefits, almost like buying a product off a retail shelf or signing up for a software service. @paulroetzer
  8. 8. My theory was that if clients understood exactly what they were getting, and agreed ahead of time what it was worth, we could remove the mystery from the equation and focus on delivering value and results. @paulroetzer www.pr2020.com
  9. 9. The problem was that the billable-hour model was the only one I had ever known. @paulroetzer
  10. 10. How would I build an entirely new financial model and productize a service business? @paulroetzer
  11. 11. “The guiding principle was that set prices had to be value based, meaning they were to be determined based on perceived and actual value rather than the number of billable hours something takes to complete.” @paulroetzer
  12. 12. value-based pricing @paulroetzer www.pr2020.com
  13. 13. estimated hours (at peak efficiency) perceived value builder vs. driver hourly revenue target costs loss leader service level value-based pricing variables @paulroetzer www.pr2020.com
  14. 14. the price of inefficiency a press release Professional A Hourly rate = $150 Hours to complete = 3 Cost = $450 @paulroetzer www.pr2020.com
  15. 15. the price of inefficiency a press release Professional B Original draft ($150/hr) = 5 hrs or $750 Sr Assoc edit/review ($250/hr) = 1.25 hrs or $312.50 Edits ($150/hr) = 0.50 hrs or $75 Sr Assoc final edit ($250/hr) = 0.50 or $125 Total = 7.25 hrs or $1,262.50 Professional A = 3 hrs @ $450 Professional B = 7.25 hrs @ $1,262.50 @paulroetzer www.pr2020.com
  16. 16. The agency, not the client, should pay for professional development and inefficiencies. @paulroetzer www.pr2020.com
  17. 17. inefficiency factors distractions @paulroetzer www.pr2020.com
  18. 18. inefficiency factors time tracking @paulroetzer www.pr2020.com
  19. 19. inefficiency factors motivation @paulroetzer www.pr2020.com
  20. 20. builders are recurring campaigns designed to create and expand assets @paulroetzer www.pr2020.com
  21. 21. image:  Pedro  Moura  Pinheiro drivers are campaigns designed to capitalize on existing assets to accelerate success @paulroetzer www.pr2020.com
  22. 22. origins of the point pricingtm model @paulroetzer www.pr2020.com
  23. 23. 2006 @paulroetzer www.pr2020.com
  24. 24. 2008 @paulroetzer www.pr2020.com
  25. 25. 2010 @paulroetzer www.pr2020.com
  26. 26. Started working on a marketing intelligence engine in early 2012. @paulroetzer www.pr2020.com Marketing Score became the minimum viable product (mvp)
  27. 27. Looked to agile development models for inspiration on building software and standardizing recommendations using artificial intelligence. @paulroetzer www.pr2020.com
  28. 28. “Lean thinking defines value as providing benefit to the customer; anything else is just waste.” “As in any lean transformation, existing systems and tools often need to be reinvented.” seeking inspiration @paulroetzer www.pr2020.com
  29. 29. In practice, many teams use a relative size measure such as story points or ideal days. In Scrum, it’s not about how much work you start; it’s about what customer-valuable work you finish. What we are trying to avoid is work that adds no short-term or long-term economic value. seeking inspiration Epics, Stories and Sprints @paulroetzer www.pr2020.com
  30. 30. Epics, Stories and Sprints were too abstract, so we simplified the concepts for marketers. Epics = Projects Stories = Tasks Sprints = Campaigns seeking inspiration @paulroetzer www.pr2020.com
  31. 31. the value metric @paulroetzer www.pr2020.com
  32. 32. source: Price Intelligently @paulroetzer www.pr2020.com
  33. 33. a value metric is a pricing unit that aligns with the value you create for customers. @paulroetzer www.pr2020.com
  34. 34. eggs = eggs @paulroetzer www.pr2020.com
  35. 35. @paulroetzer www.pr2020.com
  36. 36. @paulroetzer www.pr2020.com
  37. 37. @paulroetzer www.pr2020.com
  38. 38. @paulroetzer www.pr2020.com
  39. 39. @paulroetzer www.pr2020.com
  40. 40. @paulroetzer www.pr2020.com
  41. 41. 2010 @paulroetzer www.pr2020.com
  42. 42. 2014 Copyright © 2015 PR 20/20. Point PricingTM is a PR 20/20 trademark. All rights reserved. @paulroetzer www.pr2020.com
  43. 43. inside the point pricingtm model @paulroetzer Point PricingTM is a PR 20/20 trademark. All rights reserved. www.pr2020.com
  44. 44. (it’s our value metric) a point is a fixed unit of value. @paulroetzer www.pr2020.com
  45. 45. Point PricingTM ensures clients get the full value of every dollar spent, regardless of how much time it takes to deliver. point pricing basics @paulroetzer www.pr2020.com
  46. 46. Each project within a campaign is assigned a fixed-point total (e.g. blog post = 3 points) based on value creation rather than hourly estimates. Points are allocated by campaigns and goal type (i.e. brand, leads, sales, loyalty), and therefore always tied to performance. Points provide total transparency into pricing, progress, performance and resource allocation. point pricing basics @paulroetzer www.pr2020.comEvery point has a purpose.
  47. 47. drivers 40% builders 60% sample monthly gameplan @paulroetzer www.pr2020.com
  48. 48. sample content campaign ebook (35) landing page (2) blog post (3) 3-part email nurturing (6) template social updates (1) social update scheduling (1) webinar (15) Total = 63 points @paulroetzer www.pr2020.com
  49. 49. www.pr2020.com every campaign is a series of projects designed to achieve a goal sample campaign center @paulroetzer www.pr2020.com
  50. 50. www.pr2020.com sample campaign center @paulroetzer www.pr2020.com
  51. 51. www.pr2020.com sample campaign center @paulroetzer www.pr2020.com
  52. 52. sample point pricing value chart Standard Point Pricing project value charts are built into online client centers @paulroetzer www.pr2020.com
  53. 53. assigning point values Agencies can’t accurately predict hours due to variables such as professional competency, focus, efficiency and forecaster bias. The higher the number, the more uncertain the forecast. The Fibonacci sequence reflects this uncertainty. @paulroetzer www.pr2020.com
  54. 54. assigning point values The sequence represents a set of numbers that increases roughly based on a fixed ratio of 1.618—the golden ratio. Each subsequent number is the sum of the previous two— 1, 2, 3, 5, 8, 13, 21, 34, 55 . . . @paulroetzer www.pr2020.com
  55. 55. We’re still very early in the process, with significant iterations in the works . . . @paulroetzer www.pr2020.com
  56. 56. But we can already see positive impact on productivity, accountability, client performance, agency growth and profits. @paulroetzer www.pr2020.com
  57. 57. considering a pricing model transformation? @paulroetzer www.pr2020.com
  58. 58. pricing model considerations What are the weaknesses of your current model? @paulroetzer www.pr2020.com
  59. 59. pricing model considerations What are the agency (and client) goals for the new model? @paulroetzer www.pr2020.com
  60. 60. pricing model considerations What services does your agency provide that can be standardized (i.e. description, scope, price)? @paulroetzer www.pr2020.com
  61. 61. pricing model considerations What is your agency’s value metric? @paulroetzer www.pr2020.com
  62. 62. pricing model considerations What is the price per X (X = your value metric)? @paulroetzer www.pr2020.com
  63. 63. pricing model considerations Does the price per X vary based on service package level? @paulroetzer www.pr2020.com
  64. 64. pricing model considerations Should you publish your pricing? @paulroetzer www.pr2020.com
  65. 65. pricing model considerations Will the model work within your existing project management, time tracking and accounting software? @paulroetzer www.pr2020.com
  66. 66. pricing model considerations Are there options to beta test the model? @paulroetzer www.pr2020.com
  67. 67. pricing model considerations How and when do you introduce the new pricing model to clients? @paulroetzer www.pr2020.com
  68. 68. pricing model considerations How do you ensure loyal clients receive equal or greater value in the new model? @paulroetzer www.pr2020.com
  69. 69. pricing model considerations How do you benchmark and monitor impact on performance— clients, agency and personnel? @paulroetzer www.pr2020.com
  70. 70. “The future belongs to dynamic agencies with more efficient management systems, integrated services, versatile talent, value-based pricing models, a love for data, and a commitment to producing measurable results.” @paulroetzer
  71. 71. paul  roetzer,  @paulroetzer   CEO  |  PR  20/20   creator  |  MarkeCng  Score  &  MarkeCng  Agency  Insider   author  |  The  Marke8ng  Performance  Blueprint  (Wiley,  2014)  &   The  Marke8ng  Agency  Blueprint  (Wiley,  2012)   www.pr2020.com

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