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Agency Espresso

Because you're worth it

I've written and spoken a lot recently about the risk of 'margin squeeze' in the current climate for agencies.

In the last couple of weeks I've lost count of the conversations I've had with agency leaders where they've sheepishly admitted that yeah, their rates are too low, have been for years, and they know they should raise them but they haven't got round to it because they're too busy doing all the work they got by being cheapest but aren't making enough profit on to hire others to do it.

My role isn't to get into the operational details of setting pricing — there are plenty of sales and pricing experts to help with that.

My role is to help agency owners ensure there is the high-altitude long-term thinking in the business, at owner, board and CEO level so that the agency can see issues and make better decisions themselves, to serve the bigger strategy.

Your board should be spotting issues like low prices and margin squeeze and challenging them, supporting the CEO and leadership team in analysing the market, deciding on positioning, and advising on approaching the issue with clients.

Otherwise, what happens is that the agency owner and CEO always take the hit — absorbing the pain through reduced earnings, lower business valuation, or increased stress as a result of low margins leading to poor cash flow and low reserves.

Somebody has to pay the costs of having a great agency, and it should be the clients rather than you.

You should be earning from having a great agency.

Take some time to analyse your margins, identify any pressures on them, and discuss how you are going to chart a course to healthier profits.

Be bold, because you've probably undercharged for years.

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