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.

Want to start your own subscription agency, here are some tips:

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 you apart from regular agencies is your 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. Here are some helpful tips:

• 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.

To run a subscription-based agency efficiently, you need the right tools in place:

• Customer relationship management (CRM) software: Use CRM software to manage client relationships and keep track of communication history.
• Project management software: Use project management software to keep track of ongoing work and deadlines.
• Billing and invoicing software: Use billing and invoicing software to automate payments and track revenue.

In order to run a successful subscription-based agency, it’s important to have the right tools in place. One key tool is a shared documents service, which allows you to have a shared drive with your customers and ensure everyone has access to the latest files.

With Milton, our all-in-one tool for service companies, we offer features such as shared files, centralized feedback, collaborative tasks, and more. By using these features, you can handle more clients with less issues and complexities, allowing you to focus on keeping your clients happy and providing the best service in your market. By following the right tips and utilizing the right tools, you too can run a successful subscription-based agency and grow your business over time.

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 may 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.