All agency owners want to get new business in. They want the retained income to help them to sleep easier at night, coupled with some big juicy projects to keep their team engaged. And they know that they need to go outside to the big wide world to get this extra revenue and profit.
However, there could be several hundred (or thousand as I’ve witnessed on many occasions) pounds of revenue and profit sitting inside your agency. One area to look is the costs that you’re incurring on behalf of clients. Here’s a few examples:
Hosting and Domains
Probably the most poorly done of all recharges in practice…and yet it should be the simplest process:
- You pay hosting and domain providers a similar amount per client each month/quarter
- You invoice your client on a repeating basis in line with the cost – with a mark-up added for managing the supplier relationship
- You collect the fees automatically via a Direct Debit system e.g. GoCardless
- The money hits your account
Sounds simple and yet it’s something that’s consistently brushed under the carpet. Most agencies aren’t even breaking even on their hosting and domain costs never mind making a profit. Baffling!
Travel to and from client meetings
This one tends to be completely forgotten about in pitch documents and contracts. Agencies just seem to accept that their team travelling to and from clients for meetings is part of the overall fee. But these costs can soon spiral and if you’ve not agreed to charge them back then each extra £1 cost is hitting the bottom line profitability of that project. Ideally you’ll agree up front that any travel costs are reimbursed by the client at cost…freelancers do this so why can’t agencies?
Paid Social and Pay Per Click
This one is actually done pretty well. Agencies in the main are good at charging back the cost of Social and PPC costs to clients, along with their time for managing these various campaigns. But my question is always the same; why would you charge the physical spend back at cost? Just like with hosting, you’re managing that supplier relationship so that the client doesn’t have do. They don’t need to consider the administration burden of uploading invoices to their accounting system, communicating with the supplier and making sure their invoices are paid on time. It’s who you takes this on. So in my opinion you should be paid a mark-up on cost for doing this.
Third party tools
Most subscriptions you pay each month will be used across the board on many clients and you’ll probably use them within your own agency as well for internal stuff. However, you may be paying for certain subscriptions completely on behalf of 1 client. If that client didn’t exist you wouldn’t be using (and paying) for that subscription, so make sure to charge this cost back each month and again add a mark-up for managing the subscription.
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