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What Is Agency Pricing : Everything You Need To Know

Despite the fact that it's a hard decision, it's crucial to study the basics of agency pricing and its various models because it'll help you better explain what factors determine your prices. So, in this blog post, we'll cover agency pricing as well as other aspects of the concept:

What Is Agency Pricing : Everything You Need To Know

When you start a business, how do you decide what prices to charge for your services?

Even though it's a difficult decision, it's important to learn the basics of agency pricing and its various models because this will help you understand better what determines your prices.

So this blog post will extensively go over agency pricing and various aspects surrounding the concept:

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Agency pricing:

Agency pricing is a term often used to describe a fee that an agent, broker, or financial advisor charges you for their services.

Agency pricing is typically what the market price of a given product or service would be if no agent was involved in the sale.

This can be helpful for consumers who are not sure what to expect when it comes to pricing, and it's also helpful for individuals who want to avoid paying too much money on a product.

However, this type of pricing can also create a problem if someone is selling a product or service that he doesn't have in his possession and for which there are no comparable products available within the price range that he is charging.

The only way the consumer could be fully protected in this situation would be to use a reserve price for the product.

If the seller does not have enough products to sell, he will have to price the item no higher than his reserve price.

Since there may not be a reserve price for this item, the only way a consumer would be able to get a bargain is if there are no other goods comparable to the one being sold.

Significance of having a proper agency pricing model:

When going into the business of marketing or selling products and/or services, it is completely essential that you choose a proper agency pricing model. This will help you to understand the cost of marketing and selling products.

However, many people disregard this altogether when going into a new business venture which can be extremely damaging at times.

By choosing an agency pricing model that works best for your product, sales figure, or service; it will give you an accurate understanding on how much or how little money is needed per customer sale.

If you have your product listed with one of the virtual stores that are on line, both company and customers will be aware of how much revenue will come in for each sale.

So if there is no knowledge about producing an accurate estimate per customer sales, then now it can also make business planning a bit hard to do.

Being aware about the cost for marketing and selling a good or service is crucial even if you are contracting an agency to help your business's sales division.

Though many of these companies will provide you with the most up-to-date data that they expect, there may be times when inaccurate information can have far reaching effects on both your company's performance as well as customer satisfaction levels.

You should always do your best to find the most cost-effective pricing model that you can take advantage of when it comes down to evaluating or setting an agency.

We always strive to help our customers in all endeavors so when going into the business of marketing, you should make sure that your seller selection is being done right.

This will give you a clear understanding on how much revenue is brought in for each sale and what types of results can be expected.

When finding an agency pricing model, it would also benefit you to use specialists that know more about their field than just promoting themselves by using inflated numbers as they claim .

This will allow you to become more informed about certain companies and so that in turn, it can help benefit your future business tomorrow.

One of the most important things to do before starting your company or designing an agency pricing model is to fully understand what your business does.

Your agency pricing model should be able to accommodate a wide range of clients with different budgets, needs and goals.

You'll also want to make sure that your pricing model is built around clear rules and regulations so that you don't end up overcharging or underselling your services.

Agency Pricing Models:

1) Hour based Model:

Agency pricing models are a good way for businesses to produce more sales and provide better service by giving customers their own dedicated sales representative.

The first one is the hourly-based model, which is where agency workers are paid per hour of work they do .

The firm will pay them a certain amount for each hour they work and that sum will be divided into various components such as the gross salary, commission, benefits and taxes.

The hourly-based model is the most common form of agency pricing and it usually represents an entirely different business model.

The agent might also have an option to earn a percentage of the client's gross sales which can be either tied to volume or dollars.

Agency pricing is a great way for the employees to earn some real money on their own time.

2) Project based Model:

Project based models require the employee to take on clients as payment for their services and this usually takes place like a project.

If the sales agent is promoted to a manager, their client base can be expanded and most likely will receive more attention than agents working in the hourly-based model.

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Depending on the size of his team, each member usually has an agreed minimum target  that needs to be reached for them all to get paid some money.

In this type of agency pricing system, it does not matter if there are fewer or many clients as most clients are concentrated within the same team.

The commissions from this type of model are usually split between the employee and his client, who each receive their fair share.

3) Performance oriented price model:

Performance-based commission system is perhaps the most reluctant type of agency pricing that requires some kind of proof or skill set before being compensated.

The client will reward and promote those with excellent performance to positions such as supervisors, gift planners etcetera.

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This can also be a metrics based model which calculates the employees' contributions to their initiative against targets they are trying achieve. This can be a great way for the employees to express their potential in promotion.

4) Pre-negotiated pricing model:

This is generally a commission based payment plan that remains in effect after the transaction has been completed.

Just like hourly-based model, this working schedule usually consists of fixed hours every week but operates on an indefinite basis as well.

Within most agencies pre-negotiation pricing exists and it might be either based on volume or a temporary base figure approved by both parties prior to any further transactions being made between them while negotiating rates will usually take place when required prior to the next contract.

Larger companies can have a formal pricing policy where all contractors and staff will be governed by set prices but smaller agencies might use this methodology because of its simplicity and flexibility.

5) Mixed Pricing Model:

Mixed pricing is generally a mix of two or more models.  It belongs to the uncertain phrases and it can be used when there are various values which have to be effectively followed while negotiating on different goals other than pure profit.

There might come offers from clients wanting lower rates, however this cannot deter you because of all the work which has been invested into your model so far by providing such an advantage.

You might also receive discounts but these should not allow you to set a low sum. It is better to have a liberal sum that might be broken into smaller sums as part of your overall structure.

You will enjoy being able to handle different actions for cheaper fees, however the same cannot stop you from having higher commissions on some of these activities because it just means more money in your pocket.


The nature of an agency and its pricing models means it can face difficult time trying to establish a reliable customer base.

If you are putting all of your effort towards being truthful, and if you appreciate the value given by every task given to you in good quantity with no motivation for commission, then initiating an agreement with clients as well as doing tasks each day would help you win a reputation.

So i hope this article on the topic has helped you understand more on the definitions and intricacies of agency pricing models, which are widely used in this field.

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