7 Ways to Increase the Profitability of Your Agency without Adding New Business

8 minutes read
Ways to Increase the Profitability of Your Agency without Adding New Business


Everybody seems to be talking about it.

The recession seems inevitable as the US economy slows down and the national GDP drops.

Should you just accept the recession and continue doing what you are doing OR prepare for an upcoming Recession OR use the recession as an opportunity to pay attention to your business hygiene and increase its profitability?

Let’s dive deeper into this.

I don’t think you should merely accept the fact and sit without taking any action.

So, how do you prepare for it?

I was recently on a podcast for agency owners called uGURUS, where I talked about How to Prepare for an Upcoming Recession. You can listen to the full podcast here.

It’s hard to meet your sales goals or add a new business during the recession. But this is the best time to pay attention to your business hygiene and find an opportunity to improve your finances without adding a new business.

In short, leveraging recession to increase profitability is not a bad idea at all.

Here are seven ways to increase your agency’s profitability without adding a new business.

1. Cut Unnecessary CC Bills and Subscriptions

One of the first things you will need to do is look at your credit card bills. You probably have dozens of expenses, memberships, and subscriptions you don’t need. Take a long, hard look at your most recent credit card bills and cut those down that you don’t need.

Moreover, identify the tools or software you don’t need. As an agency owner, you often have subscriptions you no longer need or rarely use. For example, the LinkedIn premium is a value-added subscription. However, canceling it would save considerable money if you don’t use it often.

As a digital agency owner, you probably have dozens of SEO tools. But if you already have a white label partner, why not use their tools. You can cancel your subscriptions and start using your partner’s SEO tools.

2. Find Alternatives

Finding less expensive alternatives to your current software and tools can also help you boost your profitability. Just make sure switching to these alternatives won’t affect your productivity. In short, they should offer the same results.

In this regard, AppSumo is the best place to find a less expensive alternative. This online deals website offers exclusive discounts on digitally distributed goods. You can get lifetime deals (LTDs) on many tools and applications. Getting a lifetime deal can help you save thousands on monthly subscriptions.

We have done this, resulting in significant monthly savings. We have been using ClickUp, a project management tool, for a while. The platform raised its monthly subscription by nearly 50% before the renewal was due. This encouraged us to look for less expensive alternatives.

Today, we have moved to an open-source platform. It helped us save around $1700/Month. That’s more than $20,000 a year. But most importantly, moving to the new open source platform didn’t affect our productivity. If anything, we can now customize the platform as we grow, making this a viable long-term solution.

Finding cost-effective alternatives isn’t limited to software and tools alone. You can also find better and less expensive options for your business processes. For example, many digital agencies have FTEs or work with different contractors/ freelancers. And you need to work with multiple freelancers or contractors or hire more FTEs for complicated projects. It’s not only expensive but also inefficient.

Instead, you can hire a white label team. A white label team consists of a diverse group of experienced and skilled members. This helps you cut overall costs as you get access to multiple talents under one roof. At the same time, your productivity remains unaffected.

For example, if your agency builds both WordPress and Shopify websites, you are going to need two different sets of developers/freelancers/contractors. That’s double the cost and twice as many efforts. Instead, why not engage a white label partner who can provide you with both WordPress and Shopify website services at a flat monthly cost?

Moreover, building websites require different expertise, especially for customizations. You will need a multitalented team of frontend developers, backend developers, experienced QAs, designers, SEOs, and a server team.

Hiring individual contractors or freelancers for each expertise will send your overall development cost soaring. On the other hand, hiring a white label partner would be much more cost-effective and efficient.

3. Pay Upfront and Save Cost

Most agencies use products or services with a monthly recurring cost, whether an SEO tool or a white label partner. If you are going to use these services in the foreseeable future, you should pay upfront for a year or so and save money as long as your business has a healthy cashflow.

For instance, E2M offers monthly plans to our agency partners. However, most of our agency partners switch to paying for a quarter upfront and avail 10% discount which adds into their profit directly by saving the cost.

4. Getting Rid of Office Space

Remote work is fast becoming a mainstay as we speak. According to the Ladders, 25% of all professional jobs in North America will be remote by the end of 2022. Also, remote work opportunities will continue to rise through 2023.

In other words, if your culture is also fast becoming remote, it makes sense to minimize or get rid of the office. When you cut down the real estate cost by going 100% remote, you can also save other recurring costs like:

  • Building repair and maintenance
  • Utilities like HVAC and electricity
  • Housekeeping
  • Water
  • Internet
  • Office furniture

If your digital agency can’t be completely remote, you can move into a small office or rent a shared workspace. It will help you cut down the costs and still maintain office space.

5. Add Recurring Revenue Business Model

Another way to increase the profitability of your agency is to add a recurring business model. Many agencies face a dry spell in one quarter, while they are overwhelmed with too many projects in the next. You need to find stable revenue streams if you want consistent cash flow.

Take a good, long look at your present business offerings.

  • Can you turn one of your services into a monthly service model?
  • Can you launch a new service with more stable revenue?

For example, if you are not selling website maintenance OR SEO OR Content as a service then you can create a monthly subscription model for these set of services. This could help you generate stable revenue and avoid dry spells.

6. Keep Growing Existing Clients Accounts

Next, you can think about growing your existing client accounts. While you should target new customers as it helps expand your business, upselling offers a more cost-effective way to streamline your revenue.

For starters, upselling to an existing customer is easy. As they already know your agency, they are more willing to buy additional services from you. Think of what you can upsell to your existing customers.

The key to successful upselling is choosing a relevant service. You can also use comparisons, offer discounts, and include customizations based on customer preferences.

You can also send information about the latest trends in your industry and how the new service or product will help them succeed. This should help you upsell readily. However, avoid being pushy.

7. Increase Your Pricing

The final step is to increase your pricing. Most agencies are dead set against raising their prices. But keeping your costs down isn’t always a good idea. To begin with, pricing based on costs undermines the value of your work. Moreover, it cuts your profit margins by a mile.

You will need to be careful. Be sure to identify services that you can price by value. You will need to keep the following in mind.

  • Analyze your customers before increasing your pricing. Your price point should be what your customers are willing to pay.
  • Leverage your brand name to substantiate your increased pricing. That’s probably the best to help your customer understand it.
  • Show your clients how the pricing creates value for them. This will encourage your existing and new customers to pay the increased price.

In Conclusion

When a recession hits, every agency owner thinks of cutting costs. Instead, why not use this excuse for a little more than just keeping the costs down. Why not use It to increase the profitability of your agency without adding a new business? And these seven tried-and-tested tips can help you do this with ease.

If you want to know more about increasing profitability without adding a new business, I would be happy to have a chat. Book a time on my calendar and you will receive a calendar invite along with Zoom meeting details.

  • Manish Dudharejia is the founder and president of E2M - a full-service white label digital agency. E2M helps agencies scale their business by solving bandwidth/capacity problems when it comes to websites design, web development, eCommerce, SEO, and content writing. E2M has been helping agencies for 10 years and currently works with about 130 agencies across the U.S., Canada, UK, Ireland, and Australia.