The Modular Pricing Model That Kills Scope Creep

Eric Baum’s agency, BluLeadz is got in on the ground floor of HubSpot in 2009 and made all the right moves to achieve a truly meteoric rise. They’re ranked as a HubSpot Diamond Partner Agency and have achieved 100% growth for three of the past five years and are aiming for 200% this year. 

But, despite all this success, Baum (who has already appeared on Inbound Agency Journey once before) hasn’t gotten complecent. He demands that his employees be “rock stars” and forces himself to stay “hungry,” maintaining a strong committment to increasing growth, maximizing revenue, and netting highly desirable clients.

To achieve these goals, Baum has implemented a prospect fit matrix, and is planning a major change in the agency’s pricing model. In this episode, Baum (who can be reached on LinkedIn or Twitter) discusses how his new modular pricing model can increase efficiency while eliminating scope creep.

Enter the Matrix

• BluLeadz’s prospect fit matrix is based on a similar matrix developed by HubSpot.
• Justin Hiatt, formerly the global director of sales development at HubSpot, trained Baum and BluLeadz Marketing Manager Rob Steffins in how to adapt the HubSpot matrix for their own purposes.
• The matrix uses a number of eHarmony-style dimensions of compatibility (link provided in case you happen to be feeling lonely) to determine whether a prospective client will be a good match for the agency. 
• This new focus on signing quality clients has coincided with serveral price increases and a much more in-depth hiring process.
• Taking a page from Marcus Sheridan of The Sales Lion, Baum recently added a page to the BluLeadz site describing the kind of clients the agency doesn’t want.
• “We’ve raised the bar over the last 12, 18 months of the clients that we’re working with, and that has naturally increased our revenue.” – Baum
• The new hiring process reflects BluLeadz’s transition from smaller clients, who tend to be easier to please, to medium-size clients who demand a higher level of expertise.
• “We really look at the team now as like ‘Ok, I need rock stars,’ whereas before, you know, four years ago, I said ‘I need bodies.’” – Baum

Cracking Down on Creep

• Scope creep occurs when an agency ends up gradually doing more and more kinds of work for the client, often without any extra charge. 
• “They look at us as like ‘Ok now great! We’ve got an agency that can do everything under the sun for us. Let’s just shove all this stuff over the fence and let them deal with it.’ And we’re like ‘That’s not what you hired us for… We’re not your gofer.’” – Baum
• The problem of scope creep is similar to the problem of having too many low-quality clients in that both stem from an agency being too willing to compromise and too eager to please.
• A new pricing strategy was necessary to clearly define the agency’s role, increase revenue, and cut down on scope creep. After a few experimental attempts, one of which was modeled on the point system developed by Paul Roetzer of PR 20/20, Baum developed the modular system that he is currently working to implement.
• The modular pricing model starts with the agency’s three tiers: Basic ($5,000/month), Professional ($8,000/month), and Enterprise ($12,000) per month.
• Each tier includes certain services. Any servies above and beyond those included in the packages can be purchased seperately as “modules.” 
• Modules include Growth Driven Design, paid media (PPC and promoted social media posts), video, and advanced content. 
• These modules can be purchased on a one-month basis, so if a clients wants to produce a one-time video, they can simply purchase the advanced video module for one month and then go back to basics the next month.
• The modular system is a win-win because it ensures that BluLeadz is getting paid for all its work while also helping clients avoid paying for services they don’t need.
• “[The new pricing system] allows us to stop scope creep, but it allows [the clients] to have a list of options to double down if they so choose… It really draws that line in the sand.” – Baum

Podcast recap notes written by Grayson Quay.