One of the main challenges in Influencer Marketing is the price determination of influencers. Companies have already acknowledged the benefits of influencers, but marketers often fail in discovering the proper reward for influencer’s efforts.
Influencer Marketing is a rapidly growing industry with greater demand for influencers. It is a well-known fact that the growth of price corresponds to the increase in demand. This fact explains the trend of raising influencers’ rates.
Moreover, payment differs from person to person, which makes it more complicated for a company to justify the worth of the investment.
It is a challenge to set a fixed price rate due to the many factors regarding influencer marketing.
Firstly, the actual performance of the influencer has to be estimated. The follower’s count and engagement rate play a highly important role – often the higher these rates are, the higher the price would be.
The level of commitment can also increase or lower the amount charged. The number of posts on different platforms, types of content- whether it is an image, video, or story can change the cost.
Many brands prefer to hold to the average rate for the industry, but the choice of payment method can make it challenging to stick to the available budget. Brands can choose to pay to an influencer upfront or afterward based on performance.
For example, a popular payment method is the so-called cost-per-click/sale/impression. An influencer receives money each time a shopper clicks on a specific link, likes a post, or makes an actual purchase.
In other cases, a price may be fixed for the whole campaign and include all influencer elements in it.
Often companies send products to the influencer regarding them as payment. However, this can only be valid if the product is of great value, such as luxury fashion, electronics, or travel opportunities.
An influencer will accept such payment type only if the good or service received equals or exceeds the monetary amount they will otherwise charge.
Each company and influencer have their preferences regarding pricing. It should be well-understood that influencer’s time and effort are valuable, and they should receive a proper reward for their devotion. Most of them even consider being an influencer as their full-time occupation.
As for brands, they have to evaluate whether it is worth it to pay in influencer a certain amount and if it turns out to be profitable for their business.
Influencer marketing is a relatively new industry, and tactics and strategies are about to develop in the future. For the time being, there is no exact guide to pricing influencers.
Companies must estimate various points of their influencer marketing campaign, to set the correct price for both parties.
If you, as a marketer, struggle with deciding on the reasonable budget for your influencer marketing campaign, make sure to download our free E-book. It provides valuable insights into factors to consider regarding price determination.