IPA strives to help agencies charge based on value rather than resources

White paper aims to find an alternative to 'cost-plus-billings' model.

The Price of Success: will be launched at IPA event
The Price of Success: will be launched at IPA event

The IPA is aiming to help agencies charge their clients in a way that is related to the value they generate for the client, rather than the resources used.

The Price of Success white paper identifies six key factors for agencies to consider when putting together a pricing strategy. The IPA said that it would help to "address problems with the traditional cost-plus-billing model in an era of declining agency fees and growing agency workloads". 

The paper has been compiled with insight from across a number of industries and sectors, including management consultancies, financial services and legal firms, and highlights the opportunities and risks when setting and agreeing pricing for agency services.

According to the IPA, the six key factors in an agency's pricing strategy are:

  • Client needs: what they really want and value
  • Activities, services and products: your offering
  • Value attribution, such as what services can be valued
  • Risk: a time when agencies and clients need to be brave
  • Relationships: underscoring the importance of trust
  • Commerciality: who owns pricing

Marc Nohr, chairman of the IPA commercial leadership group and chief executive of Fold7, said: "The traditional cost-plus-billing model is becoming more and more inadequate as a way to account for the increasingly complex and diverse services that agencies offer and the true value of what they deliver to clients.

"The Price of Success defines the challenges, competitors, complexity and commercial reality facing businesses and gives agencies a wide range of tools to better reflect the value they generate for clients."

The report will be unveiled at the IPA Business Growth conference, taking place today (10 July). 

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