Subscription vs Fixed price agency

Charging for your services can be tricky. Two common models are subscription-based and fixed price agencies. Let's take a closer look at both and see which one suits your business needs better.

Fixed price agency

A fixed price agency charges a one-time fee for specific projects or services. This model is great for businesses that offer discrete, one-time services such as website design or copywriting. Here are some advantages:

• Easier pricing: Fixed price agencies can set a price based on the project's scope of work without worrying about ongoing costs.
• Clear expectations: Clients know what they're getting and how much they're paying upfront, which makes it easier to manage expectations and avoid disputes.
• Faster payment: Clients pay upfront, so there's no need to worry about collections or cash flow issues.
• More project-focused: Fixed price agencies can focus on delivering high-quality work for specific projects, without worrying about ongoing maintenance or support.

On the other hand, there are also some potential drawbacks to this model:

• Uneven revenue: Fixed price agencies may experience uneven revenue if they don't have a steady stream of projects.
• Limited customer interactions: Fixed price agencies may have fewer opportunities to build long-term relationships with clients, especially if they don't offer ongoing services.

Subscription-Based Agency

There are many successful subscription-based agencies in various industries, such as: Designjoy that provides unlimeted designs for a monthly fee. Quicklabs that provide unlimeted no-code requests to be developed and Fameuz a belgium startup providing unlimeted websites for a fixed fee. All these have some advantages:

• Predictable revenue: Subscription-based agencies have a reliable source of income, which makes it easier to plan and invest in their business.
• More frequent interaction with clients: Subscription-based agencies have more opportunities to communicate with clients and build relationships.
• Increased customer retention: Clients who subscribe to a service are more likely to continue using it, which leads to long-term business relationships.
• Potential for higher profits: Subscription-based agencies can earn more revenue from each client over time, especially if they offer additional services or upgrades.

However, there are also some potential drawbacks:

• Higher churn rate: Subscription-based agencies may experience higher churn rates if clients feel that they're not getting enough value from their services.
• More complex pricing: It can be tough to set pricing for a subscription-based agency since you need to balance the value you're providing with the amount clients are willing to pay.

Tips for Starting a Subscription Agency

Effectively managing clients is essential for success.

• Set clear expectations: Make sure clients know what they're getting for their subscription fee and set realistic expectations. This will avoid disappointment and confusion later on.
• Communicate regularly: Keep in touch with clients to provide updates and solicit feedback. Building strong relationships will increase customer retention.
• Be responsive: Respond to client inquiries and concerns in a timely manner to build trust and avoid potential churn. Providing account managers is a good idea as they can handle communication between clients and the delivery team, so everyone stays happy and focused.

One advantage that sets subscription agencies apart from regular agencies is their ability to scale. You can easily add more creative personnel to your team as you take on additional clients who provide recurring revenue. In contrast, fixed-price agencies face greater complexity when it comes to hiring staff for anticipated future contracts.

Strategies for Growth

• Invest in marketing: Develop a strong marketing strategy to attract new clients and increase your agency's visibility.
• Focus on customer retention: Encourage clients to renew their subscriptions and offer incentives for long-term commitments.
• Offer additional services: Look for opportunities to upsell or cross-sell additional services to existing clients to increase revenue.

Tools to run a subscription-based agency efficiently

To run a subscription-based agency efficiently, it's important to have the right tools in place:

• Customer Relationship Management (CRM) Software: Use CRM software like Salesforce or HubSpot to manage client relationships and track communication history.
• Project Management Software: Use project management tools like Trello or Asana to keep track of ongoing work and deadlines.
• Billing and Invoicing Software: Automate payments and track revenue using billing software such as FreshBooks or QuickBooks.
• Shared Documents Service: Use shared drives, such as Google Drive or Dropbox, to ensure everyone has access to the latest files.

With Milton, our all-in-one tool for service companies, you can streamline operations. We offer features like shared files, centralized feedback, collaborative tasks, and more. By using these tools, you can handle more clients with fewer issues, allowing you to focus on keeping clients happy and providing the best service in your market.

Want to start?

Ultimately, choosing the right pricing model for your business depends on your goals and your customers' needs. If you offer ongoing services and want to build long-term relationships with clients, a subscription-based agency may be the way to go. On the other hand, if you offer discrete services and want to focus on delivering high-quality work for specific projects, a fixed price agency might be a better fit. Regardless of the model you choose, clear communication with your clients and a focus on delivering high-quality work are key to building a successful and profitable service-based business.

Ready to take the next step? Whether you're leaning towards subscription or fixed price, building the right strategy and having the right tools will set you on the path to success.