Thank you:
A big thank you to our Guest Speaker Alfie Wenegieme from Alliance Partner Cactus.
This session focused on how agencies can boost profitability and improve profit margins. Practical strategies were shared around pricing, operational efficiency, and the use of data. There was a strong emphasis on learning from others in the industry and continuously improving internal processes. The session also explored how broader global issues—like trade disputes, international conflicts, inflation, the rising cost of living, and the influence of AI—are impacting agency operations.
Pricing Strategies for Agency Profitability
The discussion covered the challenges agencies face due to macroeconomic pressures such as inflation, cost of living increases, and client budget constraints. One key takeaway was the importance of understanding true costs and the value being delivered to clients. Agencies were encouraged to manage their resources more efficiently, review their pricing regularly, and avoid copying competitor rates without factoring in their own cost structures. Data was highlighted as essential for making informed pricing decisions.
Value Pricing in Shrinking Budgets
In an environment where client budgets are shrinking, understanding and communicating the value an agency brings is more important than ever. Agencies were urged to focus on their unique strengths and shift from traditional hourly billing to value-based pricing models. The use of AI is accelerating this shift, as it changes how time and resources are allocated. Agencies also need to be willing to walk away from clients who don’t recognise or appreciate their value.
Efficiency in Agencies and AI Use
Operational efficiency remains a key driver of profitability. This includes effective planning, smart budgeting, and closely tracking billable time. Managing headcount and making timely staffing decisions were emphasized as ways to maintain healthy cash flow. AI is increasingly being used to streamline workflows, boost productivity, and sharpen competitive advantage.
The Role of Data in Agency Operations
Accurate data is crucial for budgeting, scoping, and ensuring profitability. Time tracking was discussed not as a billing tool, but as a method for analysing resource use and identifying potential issues like over-servicing or scope creep. The session emphasized the importance of accountability when it comes to collecting and acting on operational data.
Hiring at the Right Level
Hiring decisions were another major focus, particularly ensuring that team members are both experienced and positioned to demonstrate value to clients. It’s important that experienced staff are engaged in meaningful work and not just tied up in meetings. The discussion also touched on team structure and how to balance expertise with operational needs.
Freelance Model and Agency Value
The use of freelancers was debated, with a key point being the importance of maintaining a permanent team that aligns with the agency’s income level. While freelancers can be helpful, over-reliance on them may lead to increased costs and affect pricing strategies. From a business value standpoint, agencies with a strong permanent team tend to be more attractive to potential buyers.
Value-Based Pricing in Retainer Projects
Applying value-based pricing to retainer projects presents unique challenges. It was suggested that agencies clearly define deliverables and understand their cost base. A blended approach—mixing fixed fees with value-based elements—was recommended for greater flexibility and alignment with client outcomes.
Billable Targets and Agency Responsibilities
Setting appropriate billable targets requires a clear understanding of each role’s responsibilities. A general benchmark is 80–90% billability for junior team members, with adjustments made based on the individual’s management duties and client-facing activities. This approach ensures accountability while allowing for the realities of leadership and oversight responsibilities.