Knowing What to Charge: How Much Is Your Work Worth to Your Clients?
Posted by on 05 May 2016 10:53 AM

When selling lead generation and other services to local marketing clients you need to have a clear understand of what your services are worth to them. The formula below will allow you to present a clear picture to clients of the potential ROI that you can bring them. Of course pricing depends on the industry, region and service provided, but you can even use this when prospecting by asking them what 1 client is worth to them, plugging that information into the formula and then showing them how your charge is a good investment for them. 

How to Calculate Customer Lifetime Value

Customer Lifetime Value (CLV) means the estimated amount of revenue a typical customer will spend with a business over a set period time. Professional practices like law firms and doctor’s offices can also determine the average revenue per client for a typical year, even though billings may vary greatly between clients or insurance company payments. As a local marketer, the CLV amount for your prospect is the key to showing them how your services provide real value, provided the costs of hiring you are less than 10% per customer earned.

Here's an example for law firms. A recent Survey of Law Firm Economics provides some insight on what the ROI for various marketing efforts should be for lawyers:

  • Average gross revenue per lawyer (1 to 10 in firm) = $300,000
  • Average gross revenue per lawyer (10 to 20 in firm) = $400,000

Know the gross revenue per lawyer let's us get a good picture of how much each of their clients are worth.

For example, a personal injury law firm in Georgia with ten lawyers works on 300 to 400 cases each per year. The firm earns around $4 million per year with 90% of cases yielding settlements at an average of $10,000 per settlement.

CLV per client for that firm will be set at $10,000, since the firm only takes on cases that it believes can be settled or won at trial.

According to the study, law firms spend about 2% of gross receipts for the ENTIRE FIRM on marketing. This means our Georgia firm of 10 lawyers invests about $120,000 per year on marketing. This means you have the opportunity to earn that 6-figure marketing spend with just one client.

How Much Should You Charge Clients for Offline Marketing?

The expense of getting new clients is called the “Customer Acquisition Cost” (CAC), and businesses traditionally set this at 10% of CLV.  So the firms you are prospecting are prepared to pay that to get new clients.

So let's refer to our example of the Georgia Law Firm above: 10% of CLV ($10,000) comes to $1,000, meaning that the firm’s CAC for each new client is $1,000.

You can charge them anywhere between $900 to $1100 per new client and they'd still be getting a bargain!

How to Create a Positive ROI with Online Lead Generation (APL)

Anecdotal feedback from consultants who develop law firm websites suggests an industry average of 1,000 site visitors per month for small and midsize law firm websites. Average conversion rates of 10% of site traffic to sales leads are an industry standard within reach of any business that optimizes the user experience on their site.

Conversion in this sense means about 100 site visitors taking some action on the site (filling out a contact form, clicking to email, etc.) qualifying them as a lead for the firm. With Autopilot Lead you have an even better way to capture that lead data and engage site visitors regardless of the content on the site. All they need is the traffic, which lawyers, doctors and other professionals are already paying for.

Now typically close rates on new leads for local professionals who have a good follow up strategy will be about 10%. This means your clients can very well earn 10 new clients per month from the leads you bring them through Autopilot Lead. Keep in mind that is not counting other services you might offer them to optimise their conversion rates ... 

Most businesses will have a mix of media in their marketing toolbox, from online and real world display ads, broadcast spots, and online content (social media). Online media continues to outperform traditional marketing, proving a more effective means of reaching target audiences, influencing purchase decisions and tracking success.

Once you turn professionals into clients using Autopilot Lead, you have the opportunity to bundle additional services: web design, SEO, content, social media, etc. Also, if you don't necessarily want to do that work, consider outsourcing this work and taking a percentage of the fee. 

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