Pricing is one of the first topics agency owners want to talk about when they come to us. It doesn’t matter whether they’re a five-person PR agency or a fifty-person digital agency – sooner or later, the conversation turns to fees, margins and the quiet suspicion that their pricing simply isn’t working anymore.
And the truth is, in most cases, they’re right. Pricing is the area where agencies fall behind more than expected. Costs rise, delivery becomes more complex, teams become more senior yet pricing often stays exactly where it was two, three, even five years ago. In addition, 79% of agencies are also over-servicing clients, without charging for extra work.
At Rocksteady, we see the consequences of this every day. Agencies that look healthy on the surface, with good clients, a strong pipeline, busy teams, but whose margins are under far more pressure than the founder realises.
This article walks through the biggest pricing mistakes agencies make, why they happen and how to fix them with a more grown-up, strategic, financially grounded approach.
1. Freezing Prices for Years While Costs Keep Rising
One of the most damaging mistakes agencies make is allowing several years to pass without a price review. It’s rarely intentional; it happens because founders don’t want to disrupt existing relationships, they fear losing work, or they worry the timing “isn’t right”. Meanwhile, salaries increase, overheads rise and delivery becomes more expensive, all while the revenue per hour stays the same.
The impact of this isn’t always obvious at first. It shows up subtly with lower-than-expected margins, rising team stress, cashflow fluctuations and targets that always feel just out of reach.
During budgeting sessions with clients, we often model different scenarios and ask our clients a simple question: “If you continue charging your current prices next year, will you hit the margin you need?”
How to fix it:
• Review pricing annually as part of financial planning.
• Connect pricing decisions to margin targets, not gut feel.
• Communicate increases clearly and confidently, most clients understand that costs rise.
2. Making Pricing Up Out of Thin Air
It’s surprisingly common for agencies to set prices based on competitor benchmarks, instinct, or what “sounds reasonable” with very little connection to the agency’s actual cost base. This creates a fragile commercial model because no two agencies have the same structure, team mix, overheads or utilisation profile.
When we support agencies with pricing, we use a structured model that incorporates the real cost of delivery. That means fully loaded employment costs, apportioned overheads, realistic assumptions about non-billable time and the specific delivery mix required for each service. Only then does the agency see the true cost of an hour of their team’s time and the margin needed on top of it.
How to fix it:
• Build a proper pricing model using your own numbers.
• Include all costs: salaries, overheads, non-billable time, systems and management.
• Stop using competitor pricing as your primary reference point.
3. Not Knowing What It Actually Costs to Deliver the Work
Another major issue is the lack of visibility around client-level, project-level and service-line profitability. Many agencies simply can’t see where they’re making money and where they’re losing it, without that visibility, it’s almost impossible to price well.
Founders often assume certain clients are profitable because the team “isn’t complaining”, or they assume certain services are lucrative because they’re in high demand. But once we pull the numbers together, the story can be very different. Some of the busiest clients could be the least profitable and some of the most established retainers quietly drain margin every month.
Past data is one of the most valuable inputs in pricing. It shows the real time, seniority and resource mix required to deliver results, not the optimistic assumptions written into scopes.
How to fix it:
• Implement clear profitability reporting by client, project, and service.
• Review patterns monthly and adjust future pricing accordingly.
• Use historical delivery data to validate assumptions before quoting.
4. Fear-Based Pricing and Discounting
Pricing is rarely a purely rational process. There is always a psychological layer: fear of rejection, fear of losing a client, fear of appearing expensive, fear of financial insecurity. Founders feel this deeply and to be transparent, many finance professionals feel it too.
The problem is that fear-based pricing almost always leads to discounting. Agencies reduce rates before a client asks. They hold onto outdated fees because “now isn’t a good time to increase them”. They allow retainers to expand far beyond scope instead of renegotiating. They undervalue their senior team because they’re afraid that charging appropriately might push clients away.
In the current economic climate, this behaviour is even more common.
How to fix it:
• Build a clear value narrative rooted in outcomes, not deliverables.
• Practise holding your price in conversations – confidence changes the dynamic.
• Track discounting historically to understand how much profit is being lost.
5. Underestimating the Power of Small Pricing Changes
A surprising number of agency owners believe that pricing changes need to be dramatic to be worthwhile. In reality, small, gradual price adjustments can produce significant improvement in margin – especially when combined with better utilisation, clearer scopes, and a structured rate card.
For example, increasing a blended rate from £85 to £95 can meaningfully shift profitability without dramatically shifting client perception. It’s often the difference between a modest margin and a commercially healthy one.
How to fix it:
• Run pricing simulations during budgeting to see the impact of small increases.
• Introduce predictable annual uplifts as part of your commercial rhythm.
• Review pricing alongside capacity planning to protect margin on both sides.
6. Sticking to One Pricing Model Instead of Evolving It
A lot of agencies choose one pricing model early on, often a blended hourly rate or flat project fee and never revisit it. The problem is that as your agency grows, your delivery model becomes more complex and one pricing method simply can’t serve every service or client.
Blended rates may work for very small teams, but as soon as you introduce different seniority levels, this approach hides the real cost of delivery. Moving to a tiered rate card helps teams price work more accurately, reflect differences in experience and protect margin.
Beyond that, more mature agencies experiment with value-based, outcome-based, or productised pricing models that shift the conversation away from hours and towards the impact clients actually care about. Retainers also improve dramatically when restructured around outcomes rather than buckets of hours.
No single model is perfect, but relying on just one is almost always limiting. Agencies see the biggest improvement in margin and clarity when they intentionally redesign their pricing architecture as they grow.
How to fix it:
• Move from blended to tiered rates as your team expands.
• Explore value-based or productised pricing where work is repeatable or high-impact.
• Redesign retainers around outcomes instead of hours.
• Treat pricing models as something to update regularly, not inherit permanently.
Fixing Pricing Requires a More Grown-Up, Strategic Approach
Pricing isn’t just a number on a proposal. It’s a reflection of your cost base, your value, your confidence, your structure and your commercial maturity.
The agencies that thrive are the ones that treat pricing as a strategic process, not a one-off exercise. They understand their numbers. They understand their delivery model. They understand their margin. And they build pricing that supports the agency they want to be in the future, not the one they were two or three years ago.
If reading this has highlighted gaps in your pricing or profitability or if you suspect your margins could be healthier, a structured review can make an immediate difference.
We work with ambitious agencies to bring clarity and direction to their finances – including pricing, profitability, forecasting and commercial decision-making. If you’d like help reviewing your pricing model, understanding client profitability, or restructuring your rate card, we’d be happy to talk.
Get in touch with Rocksteady to explore how our Virtual FD support can help you build a pricing structure that’s clear, confident and commercially strong.
