How we work: points pricing

Abacus

We charge for our work on a points system. We do not charge by the hour or by the day. This means that clients are paying for results and tangible deliverables not for effort or time. This is a fundamental part of the way Articulate is delivering better marketing services to clients.

But how does ‘points pricing’ work, where did the concept come from and how have we implemented it?

How does points pricing work?

A client buys a certain number of points each month (if they are on a retainer) or as a one-off purchase (for one-off projects).

As a very rough rule of thumb, one point corresponds to about 100 words of copy or about an hour’s routine work. 30 points a month is really the bare minimum for a rolling marketing campaign and most of our clients buy 50+.

We have a table that lists dozens of Articulate deliverables, such as writing a short blog post, creating an infographic and so on. Each one has a ‘price’ in points. Here’s a snippet from part of the table.

Points pricing table

Prices vary based on the number of points a client buys and the length and scope of the engagement; but typical monthly retainers run £4,500 a month and up.

The point of ‘points’

Historically, when we worked on copywriting projects, we charged by the word. This made it very easy to make budgets for projects and helped customers predict our likely costs. It was a contrast to the hourly rates charged by most marcomms and PR agencies because clients paid for output rather than effort. It aligned our interests with our clients’ because we were highly motivated to do a good job, quickly and minimise rewrites. Hourly billing pulls in the other direction by creating a false incentive to do unnecessary extra work.

But Articulate has changed in the last two years. We’re still writing, of course, but we do other things as well, such as videos, infographics and social media, which aren’t so easily priced on per-word basis. Points pricing gives us a tool for pricing these new services in a consistent way.

Also, we’ve made the change from being mostly project based to being mostly (almost exclusively) retainer based. As a result, we needed a more flexible pricing model. It’s simply not possible to make a plan in January about the precise content and marketing you need in July, for example. Yet, the new pricing model had to continue the principle of paying for output not effort, be easy to understand and predictable. This is where the points pricing comes: clients know that they are paying for deliverables but agreeing to decide exactly which deliverables at a later stage. Points pricing offers this flexibility.

We wanted a way to track our productivity as a business and estimate future resourcing requirements but, after much debate, we rejected the idea of time sheets. They’re fiddly, time-consuming and often inaccurate. We’re fans of agile development and, especially, the idea of estimating the complexity of a task rather than time taken to complete it. Tools like Pivotal Tracker uses points to do this. This is one of the inspirations for points pricing.

We named the whole thing ‘points mean prizes’ in honour of the Radio 4 game show ‘I’m sorry I haven’t a clue‘. We’ll probably have to come up with a snazzy Web 2.0 name later.

Typical monthly retainer

A typical month on a 40-point plan might look like this:

Sample monthly points expenditure

Measuring points

We have created an app that lets Articulate log completed activities and it automatically calculates the number of points and bills them to a client account. The form is on our intranet so it’s very easy to access and takes about a minute to complete.

Articulate Points App

The data is stored in a database where we can analyse activity levels on an individual basis or for client billing. For example, I send a weekly email to everyone at Articulate and I can pull a report listing everything we’ve completed in that week. We can also pull reports of activity completed for clients in a given month. The next step is to give clients their own login so that they can see work done on their account (but not other people’s!).

 

Articulate Points App

We believe that this ability to link pricing, activity, reporting and project planning is going to be a powerful tool for Articulate and we already see that customers love it. Points mean prizes!



Get a free marketing assessment



30 Days to Better Business Writing
Get free email updates whenever we publish new posts on Bad Language.

No spam. Just essential marketing insights.

Sign up today and we'll send you a free copy of '30 Days to Better Business Writing' too.

, , ,

6 Responses to How we work: points pricing

  1. Hi Matthew,

    Your article resonated with me, as I’ve been reflecting of late about ways to shift from a project-based to a retainer-based business model. Your “points” system would indeed suit many of the services I provide clients.

    I suppose your clientele is international and I am curious about the willingness of different cultures/countries to shift to what is in sum a pre-payment of services. Have you encountered any reticence and how did you deal with it?

    While I have little difficulty in getting Anglo-Saxon clients to pay an advance on most projects and their final invoice on time, that tends to be a hurdle with French clients. Studies show French businesses indeed have the bad habit of being late payers, unfortunately. Retainers are uncommon, save in a very select set of professional services, such as legal.

    What has your experience been with French or Southern European clients? Have you found it necessary to have both business models co-exist (projet and retainer-based)?

    I’d enjoy reading more about your experience.

    Cheers,
    Patricia

    • Hi Patricia,

      Some companies do find it a struggle to pre-pay via retainer but there are several incentives to do so: 1) the points are cheaper if you commit to a long-term retainer giving a financial incentive, 2) we aren’t charging by the day or the hour so people still know they are getting tangible deliverables for their money, 3) points roll over from one month to the next so even they aren’t all used up in one month they don’t disappear. We find most clients welcome this approach but we have had one or two who tried to have their cake and eat it, ie take the cheaper prices but decide from month to month whether they wanted to pay the retainer or not and, sadly, we aren’t working with them any more. But the new clients that embrace the new model more than compensate for the loss.

      As for French clients, I have never really been very successful at working with them in my present career or back in my computer games days. As you say, they’ve been poor payers and demanding, unreliable clients in my experience. I’m not saying we wouldn’t work for a French company again but I’d definitely go into the relationship in a very guarded way.

      But we do still support a project-based model. We just treat it as a ‘mini-retainer’ and charge a lot more per point. We’ve already stopped quoting by the word now so by the new year everything we do will be denominated in points. I think the most attractive part of that change is that it gives us a lot more flexibility over pricing and incentivises and aligns our clients’ financial interests with our own. We like long-term, hassle-free, predictable revenues so we make that more attractive for our clients. Simples. 🙂

      Matthew

  2. Thanks for responding, Matthew, and for the added perspective. In a previous life in the US, I worked on a retainer basis or projects (if well defined) were paid for up font. To all it was… normal!

    Let’s not put all French clients in the same boat, though 🙂 If I didn’t have long-standing, reliable (give or take few days) and cool clients to work with, I’d have hung up my shingle some time ago – or done something radically different.

    I’ve not billed by word in *years* (lest specifically requested to do so), it makes no sense, words aren’t sold by the pound, but rather fee-based or per page. The leap to points would not be hard to make for most deliverables. Some faithful clients who need work done regularly agreed to enter into a framework contract, which saves lots of admin time on both sides. It would be quite a jump for them to go for the retainer bit…despite the advantages it could offer their own budget management.

    Haven’t given up the idea though.. your post fed what has been bubbling in my head for some time and gave me a bit of a kick in the o’kole (Hawai’ian for ‘derrière”) to do something about it.

    Thanks 🙂
    Patricia

Trackbacks/Pingbacks

  1. Why timesheets are evil (and how to replace them) - 21 June 2016

    […] Here at Articulate, we use ‘points’ for measuring and reporting work and for pricing and billing. Points run through the business like the letters in a stick of rock. It’s a humane, accurate way to measure productivity because measures outputs not inputs. (Read our article about how we work for more on points pricing.) […]

  2. Should you hire a marketing agency or a marketing person? • Articulate - 28 October 2016

    […] example, at Articulate we have honed processes like pair writing, open book project management and points pricing. Agencies are tight knit teams who constantly learn and share ideas and experiences on their Slack […]

Leave a Reply