Do you know what to charge when it comes to brand deals and collaborations? When a is reaching out to you with an offer, do you know whether you should sign on the dotted line or attempt to negotiate?
Influencer marketing is still a fairly new industry, meaning that there can be a lot of confusion around best practices and what should be considered when making deals. Transparency is key when it comes to making smart decisions for all parties, which is why we’re breaking down the different factors that constitute an influencer’s market rate when it comes to marketing deals.
What Is “Market Rate”?
Market rate is based on market value, which is the value that a product or service has in the marketplace. As of 2022, 93% of marketers report having used influencer marketing. With such a high demand, it can be expected that market value would consequently be high as well. But if you don’t know how to calculate your own market value, you may be operating under a market rate that is beneath you or above you depending on your level and what is being asked of you. The major factors that contribute to a market rate are: follower count, growth rate, engagement rate, and sponsored posts.
Your Follower Count
Your follower count refers to the number of people following you. It primarily impacts your tier – nano, micro, macro, or mega (read more about the different tiers here). The higher your follower count, the farther your reach is likely to be, which can significantly increase your pay rate in collaborations.
Your Engagement Rate
Your engagement rate is the measurement of how much your audience actively interacts with your content. Engagement rate metrics include likes, comments, shares, and saves. You can use a manual engagement rate formula but they normally only take into account likes and comments. In order to analyze the more elusive but vital impacts of shares and saves, you can check the analytics of your posts and page if you have a business account, or you can use an engagement rate calculator. Phlanx is an influencer marketing platform with an engagement calculator that you can use three times a day for free or unlimited times with a subscription plan.
Once you have your engagement rate, what are you supposed to do with it? Consider the statistics on the average engagement rate of influencers in each category according to Oberlo:
- Micro Influencers – 3.86% engagement rate
- “Regular” Influencers – 2.39% engagement rate
- Influencers with a following of 50K-100K – 1.87% engagement rate
- Influencers with a following of 100k-0.5M – 1.62% engagement rate
- Macro influencers – 1.36% engagement rate
- Mega influencers – 1.21% engagement rate
Depending on which level you fall into as an influencer, you may actually be faring better than you think with an engagement rate of 3% or 5%. If so, you reserve the right to set your rate higher due to the better chance you have of bringing in more engaged users.
Your Growth Rate
Growth rate is equally as important, if not more so, than engagement rate. This is because your growth rate predicts whether your engagement is likely to stay steady or grow, or eventually decrease. Audiences are always looking for something new, and they pay attention to trends and fads. So as an influencer, you’ll need to do the same in order to stay ahead of the curve and continue to make an impact.
You can calculate your growth rate using this equation: (current # of users-last month’s # of users)/last month’s number of users*100
Say you have 5000 followers and last month you had 4800, your equation would be: (5000-4800)/4800*100=4.167% growth rate.
The average follower growth rate on Instagram is 1.9% month over month so a 4.167% growth rate would be impressive.
Your ROI
As an influencer, you are also your own boss, which means you are responsible for keeping track of all your metrics. This includes the ROI you produce when it comes to different campaigns and sponsorships. You should be following the investments that companies make in you and the results you produce in exchange. This is important information that can go into your portfolio because while you may be focused on the creative side of things, the companies you partner with will want to see how things break down into numbers.
Number of Sponsored Posts
Sponsored posts play an important role in making up your market rate, but not in the way that you might think. Because you want to make money as an influencer, you may think that having as many sponsored posts as possible is a positive thing. But the reality is that users are actually less likely to trust an influencer the more sponsored posts they see. Why is this? Your audience wants to believe that you promote products or services because you genuinely believe in them. If every other post on your profile is sponsored, people will begin to think that your opinion can be easily bought. This can lead to lower engagement and lower ROI, both of which will severely dampen your market rate as an influencer.
Your Reach
Your reach rate is based on the number of unique individuals who interact with your content. This means that the rate is calculated based on the number of accounts that interact with yours, not the number of impressions that your content receives. Reach is important because it shows brands how likely you are to extend awareness and drive conversions.
There is a section in your Instagram Analytics that shows your profile reach as well as the reach for specific posts. But you can also use scheduling and analytics tools such as Hootsuite, Later, or HubSpot Social Inbox for deeper and more customizable reports.
Putting It All Together: Pricing
As you can see, there are many different factors that go into determining your market rate as an influencer. While there is currently no set standard for influencer rates, these aspects of your profile can help you to put together a full package that supports the rate you do ask for when it comes to collaborations and sponsorships. Pay attention to how your profile stacks up against average rates for your level across the board and you can be sure that you will be able to come up with rates that communicate your value without being unreasonable and feel empowered to reach an agreement with companies that is equitable.