How to 10X Your Web & WordPress Agency
This is a guest post from Lukas Hertig, SVP of Business Development at Plesk.
Many agency owners struggle with burnout and profitability, mostly because of one key issue: they offer services on an automated time and material model. These agencies scale only by delivering more hours to customers, making growth cumbersome.
It doesn’t have to be this way. In this post, you'll explore how to improve your web or WordPress agency's business model.
Leverage the 10X Rule in your Agency
A cardinal rule in sales is to think big – 10X – for whatever you do in life and business. If you run an agency and are struggling to make it profitable, you can apply this rule to be more successful.
As an agency owner and entrepreneur, you might want to use this thinking to:
- 10X the goals you are trying to achieve
- 10X the number of your clients
- 10X your income and revenue, especially recurring revenue
- Save 10X of your time by automating 10X of your processes
- Sleep 10X better because your client websites run on a secure and performant environment
Offer Recurring Value Instead of Time-based Services
A modern option to help scale your agency by 10X is to implement as many services as possible as recurring services, in a value-based model instead of a time- and material-based model. In this model, you don’t sell your time; you sell results or outcomes.
Plesk manages your websites and WordPress instances in a graphical web interface. It’s everything you need to build, secure, and run websites and applications to simplify your life as a web professional.
Here’s how this might work in practice:
An auto retailer pays $5 per month for hosting their static website created by a website builder tool years ago. Their website is not optimized for performance, and they are interested in rebuilding it with WordPress and connecting it to a modern technical marketing stack with the goal of selling more cars.
A traditional pricing model may look something like this:
|Website development||100 hours at $60/hour = $6,000|
|Website content migration||50 hours at $60/hour = $3,000|
|Website hosting (shared, non-performant)||$5 per month|
|Website monitoring & maintenance||2 hours per month at $60/hour = $120 per month|
|SEO||3 hours per month at $60/hour = $180 per month|
|Social media marketing (inc ads)||8 hours per month at $60/hour = $480 per month|
|Total one-time costs||$9,000|
|Total monthly costs||$785 per month|
Let’s compare that to a customer-centric, value-based approach with the same scope of work.
You might begin by asking your customer what the averages sales value is per unit (in this case, a car). Let’s say it’s $25,000. At this price, the retailer may make an average margin of $5,000 per car.
Therefore, if a website generates three additional sales per month for a customer, that would mean $900,000 additional revenue or $180,000 additional profit annually.
Let’s say you charge 3% of this additional revenue as a one-time fee and 5% of it for recurring fees, per year. In return, you guarantee a minimum of three additional sales every month.
Here's what the numbers look like:
|Development fee (3% of AGR)||$27,000|
|Annual support fee (5% of AGR)||$45,000|
|Total one-time payment||$27,000|
|Total monthly payment||$3,750 per month|
Included with support:
- SEO monitoring and optimization
- Ad creation and A/B testing
- Social media engagement and management
- Monthly reporting on KPIs
Your one-time revenue just jumped by $18,000, and your recurring revenue increases by $2,965 every month!
But that's not all:
- The customer is happy – they get a guaranteed positive result, and they only spend more when they make more
- You are happy – you get more revenue and can automate work, preserving more profit
- Most costs for hosting and managing the website do not matter. You can charge whatever you like. Results are what count.
Results may vary depending on industry and category, but there is almost always a way to create better offerings and maintain a more profitable business using recurring revenue.
In these situations, your responsibility is to help the customer understand this as a necessary investment and not a cost. You need to demonstrate why your agency is the right team for the work. By focusing on results, you show that you understand the business as the customer does. You are not thinking about hours, as everyone else does.
It’s crucial that you structure your offering thoughtfully. Here are some basic guidelines:
- Target a certain niche with your services. Small and medium-sized businesses offer an armada of sub-niches you could target.
- Include relevant and proper maintenance and support services into your offering that the big agencies can’t.
- Never ever mention hours, days, or other time elements. Remember – you are providing value, not requesting a reimbursement for costs. Sell your offerings by showing your customer how much value you provide.
- Combine hosting services with other metrics-based services such as social media marketing, content production, SEO, or paid advertising management. When combined with KPIs, reporting, maintenance and ongoing support, you’re delivering extraordinary value to your clients and creating loyal partnerships that will last for years to come.
Happy 10X’ing :-)
Lukas is a born-in-the-cloud international senior business leader, investor, and speaker with 18+ years in IT – including 15+ years in the global cloud and hosting/IT service provider industry. He specializes in scaling tech startups, cloud, web hosting, WordPress, blockchain, entrepreneurship, investing and digital transformation.