The move comes after IPA research found traditional pricing models were becoming outdated
A new pricing playbook launched by IPA this week is set to provide stronger guidance for agencies with real-world examples, actionable advice for price alignment strategies, and practical tools.
An earlier report by IPA revealed a tension between the desire to innovate and the “inertia that keeps many agencies relying on traditional, tried-and-tested approaches”, which the firm has outlined as a driving force behind this new playbook.
The new tool offers a range of remuneration options, including input-based models (retainer and mark up); output-based models (commission fee, deliverable-based model and subscription-based pricing model); and outcome-based models (business performance and equity-based deal) as well as hybrid pricing.
There were five key considerations flagged by agencies and identified by IPA which shaped the creation of the playbook. The first relates to flexibility – can resources be distributed according to changing demands?
For the second, agencies flagged the stability of scope: can clients’ work be reasonably predicted or are they fluctuating? Is there an appetite for risk, which addresses whether the agency and client can tolerate variability.
Other considerations include commercial fluency – whether the client and agency have the knowledge to manage pricing models effectively, as well as the confidence and measurability of outcomes.
“Working on this playbook reinforced just how outdated many pricing conversations still are,” explained co-author Jason Cobbold, chair of the IPA Commercial Leadership Group.
“Agencies know the ground is shifting under them, but too often they fall back on familiar models because they feel safe. This is about giving agencies the confidence, and the permission, to rethink how they price the value they actually deliver today.”
AI adoption is challenging traditional pricing models, IPA’s director of agency value, Ed Palmer confirmed. “Understanding and pricing the real value an agency creates has never been more important.”
While agencies are developing their approaches, to address the shift in client’s risk appetites, the playbook helps equip agencies and advertisers for more transparent and intentional discussions about commercial models.
