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How Your Agency Can Compete Against Cheap Freelance & Outcourcing Services

Outsourcing vs agencies

When I used to run a content agency, I would frequently get email enquiries from potential new clients, wondering about our prices for writing several articles a month. I would crunch the numbers and deliver a figure that took into account my costs, the time required to liaise with the client and create the content, and the high quality of the pieces we would produce.

The response was often: “Thanks, but I’ve decided to go with another writer. I found them on Odesk, and they’re going to do the job for $5 an article.”

And I would slam my head against my desk in frustration.

Does this sound familiar? How often have clients asked for a quote, only to turn around and choose an overseas freelancer charging rock-bottom fees. So how do you, as an agency, compete against those offering cheap services?

1. Compete on value, not price

The first thing you need to do is get clear on your value statement; what you are providing the client that justifies your value.

After all, most clients will be comparing your quote against other agencies, not just those clients who want a total bargain. You client needs to understand what you offer is more awesome, and will offer superb benefits to their company for years to come. Hence, you are priced accordingly.

You don’t want to be in a business competing on price. This is why the retail market is struggling so much right now - so much of the retail game is based on who can offer the best in-store specials, but online shopping has practically wiped out any chance of being able to compete on price. There’s always someone who can go cheaper. Instead, you need to offer a more unique experience or service - your value proposition.

Want to learn more about value pricing? Sign up for our free webinar on Oct 28: Pricing: Capturing Value in Your Agency.

2. Change Your Marketing Focus

Part of the reason you’re receiving so many inquiries about pricing is that you may be marketing to the wrong niche.

Each business has specific criteria and behaviour when looking for an agency, and they’re not all the same. Some companies want national press, others want to compete internationally through their website. Some want a poster design for a trade show that’s eye catching, but simple. And some want the a simple brochure website so they can buy a local directory listing. Some place more emphasis on quality, branding and professionalism. Others just want the best price.

I found once I changed my marketing focus from cash-strapped internet micro-businesses to local business owners who have very little concept about how the internet worked, I stopped receiving so many of these requests for discount prices.

Many business owners are just happy to pay a premium for someone they trust to take care of the creative or marketing side of things. By aiming at certain brands or specific markets, you could improve your ability to command a premium price.

3. Fit Your Client Into the Project Management Triangle

 project-management-triangle

Have you ever heard of the Project Management Triangle?

My Dad, a builder with over 35 years experience, explained the project management triangle to me before I started building my own house. “When you’re getting quotes and talking to contractors,” he said. “Remember that your project falls are one of the sides of the triangle - you can achieve two of the project goals, but never all three.”

According to the project management triangle, I can have a high-quality project delivered quickly, but it’s going to cost more. I can get a project delivered quickly for a great price, but the quality will suffer. And I can get a high quality project delivered for a great price, but I’ll wait longer for it. I am always compromising one of these three goals in order to achieve the other two.

The same goes with any business project, and this can be a useful way to assess if a client is a good fit for your agency. Generally, agencies are looking to achieve high quality work for their clients within a specific time frame. This means they aren’t the right match for clients who want work at the best price within a tight time frame.

You shouldn’t feel bad about letting these clients go. They aren’t the right fit for your agency in the first place.

4. Join the Outsourcing Fray

Have you ever heard the phrase, “If you can’t beat ‘em, join ‘em?” Well, this might apply to your agency. Yes, I’m serious, if you’re struggling with competitors who are using , why not use the same technique to lower your own costs?

In his book, 4-Hour Workweek: Escape the 9-5, Live Anywhere and Join the New Rich, Tim Ferriss takes outsourcing to a whole new level. His ultimate goal is to outsource all tasks in his business he specifically doesn’t need to do, so that he only has to work for a few hours a week, and can spend the rest of his time at leisure. Ferriss says:

“If you spend your time, worth $20-25 per hour, doing something that someone else will do for $10 per hour, it's simply a poor use of resources.”

While you don’t have to follow Ferriss’ extreme example, you could outsource some of your agencies more mundane tasks, clearing up time in your creative team for the awesome work you pay them for.

There are cheap outsourcers and then there are cheap outsourcers. The fact is that people in developing countries have a significantly lower cost of living, and so a liveable wage for them is much lower than it is for me. $10 an hour might sound like nothing, but to many freelancers, this is more than they could earn doing anything else.

You can either pass this savings on to your clients or use the other techniques in this article to create a bigger profit margin.

I used to outsource some projects to freelancers in india - these included submission of articles to various directories (back when that was a thing), running certain ad campaigns, and some general admin. I also worked for a company that outsourced transcriptions.

Is your agency competing against cheap freelancers and outsourcing companies in developing countries? Are your clients expecting the universe for less than $20? Well, you can beat the outsourcing trend and keep your agency in the black.