I'm in the process of launching a web design agency and I'm having trouble nailing down a workable business model. My strengths are in landing pages, sales funnels and Wordpress websites – All geared to boost growth using a balance of high-end design, user experience and conversion strategy. My clients are techy savvy (not small 'offline' businesses) and don't need a lot of hand holding. So think experts, bloggers, other digital service businesses/agencies, consultants, etc. Models I've thought of so far: #1 – 'Hire a design team for $X,XXX per month' retainer style model. #2 – Break up our services into packages with clear pricing (eg. Wordpress Site - $X,XXX, Landing Page - $X,XXX) #3 – Charge per project a-la-carte and do not publish pricing. #4 – Specialise and only offer one thing (eg. High converting landing pages) My question is: If you were launching a new agency or digital service business, what model would you use?
I remember when I started my digital agency out of my apartment back in 2011, kudos to you for taking the big step, you'll enjoy the ride.
I own a digital agency called Noticed based out of Philadelphia, PA. I've pretty much made all the mistakes in the start-up phase of the business over the last 3 years, as well as tried nearly every business model.
Below is my responses to each of your models:
1.) This seems like a virtual teams model and its more driven towards larger companies who can afford to hire a team each month. The advantages of this model are 12 month contracts and reoccurring monthly income, and the profit/loss is fairly easy to determine. If you decide on this then you need to primarily position yourself as a virtual teams agency with a USP.
2.) I mentor many start-up web agencies and I've never recommended packaged pricing, because it limits your growth. Also you reach smaller clients vs larger clients and it comes across as cheaper services to clients who have value for their digital presence. If you want to charge $20-100k for a WordPress website, then you need to go with option 3.
3.) Our agency follow the a-la-carte pricing model and its helped us grow significantly, this is due to fact we branded and positioned ourselves to target clients who don't look at the price 90% of the time and are looking for value. Not only that, we built a really strong sales process that allows us to target clients who are spending $50-200k on a website. I would go with this option without a doubt.
Extra Tip: I would recommend adding Maintenance & Support, SEO and PPC services to your business model. You can sell these services to the clients on a 12 month contract which will give a stable income to concentrate on fixed bid projects.
If you ever need to jump on a call and get some advice/direction, then feel free to reach out to me.