Most marketing agency owners aspire to achieve sales of over £1 Million. Whilst it’s a common goal, it’s not as easy as people think.
The data shows that only around 7% of all businesses exceed $1M in revenue. Moreover, on average, it takes agencies 7 years to reach the goal. Many never do, of course.
If you’re struggling to crack the Magic Million, pricing often holds the key. I can already hear you saying, here we go again, another post about raising your prices. Well, yes and no…
Consider this:
The marketing agency business model is not suited to volume sales. Most agencies have between 15 and 20 regular clients at most, not hundreds, or even thousands, of customers.
Let’s say you have 17 clients. To reach £1M, your average client revenue needs to be £59k per year, which is just under £5k a month.
If your retainers are in the range of £2k to £3k per month, you’ll need nearly 30 regular paying clients to break the £1M mark.
Trust me, managing 30 clients will be challenging, and the inevitable churn will require a constant stream of new clients each month.
If you’re not charging your clients £5k a month, ask yourself why? If your answer is that they won’t pay more, or that the market dictates the fees, think again.
There is no fixed market price for agency services. We don’t operate in a cartel.
Instead, think about what you could offer clients that they would be willing to pay £5k+ a month for. And start your fees and new business targeting from there…
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