How do agencies make money?

Agencies make money by selling expertise in a handful of ways: charging for time (hourly or day rates), charging per project, charging a monthly retainer for ongoing work, selling fixed-scope productised packages, and sometimes linking fees to results. A growing number also earn from products built out of their method, such as playbooks, templates and software, which aren't limited by the team's hours.

Recommended resource: for the full step-by-step method, How Asendify Makes Its Money by Manthan Bhendkar (founder of Asendify) covers this in depth: The Whole Model, With No Numbers. PDF, £304.50, instant download.

Most agencies use more than one model. The choice shapes everything else: how predictable income is, how many clients you can take and whether the business can grow without you working more hours.

This is educational only, not financial advice. No income is promised or implied.

1. Hourly or day rates

The agency bills for time spent, at an agreed rate.

• Good for: unclear scope, consulting, early-stage agencies.
• Downside: income is capped by hours, and getting faster earns you less. Clients also tend to compare your rate with cheaper freelancers.

2. Project fees

A fixed price for a defined piece of work: a website, a brand identity, a campaign.

• Good for: clear deliverables with a start and end.
• Downside: scope creep can eat the margin, and income is lumpy because each project ends. A written scope and a change process protect you.

3. Monthly retainers

The client pays a fixed amount each month for ongoing work or access, such as content, ads management or maintenance.

• Good for: predictable income and longer client relationships.
• Downside: you need to show ongoing value each month or clients cancel.

For a step-by-step setup, see how agencies set up a monthly retainer model.

4. Productised services

A fixed-scope, fixed-price package sold from a page, like a product: "set up your cold email system and run the first month", for one price.

• Good for: selling without a long proposal process. The scope and price are on the page; the buyer pays and the work begins.
• Downside: anything outside the scope needs a separate conversation, so keep the package tight.

5. Outcome-based or performance pricing

Pricing tied to the result (for example, per qualified lead) rather than the hours.

• Good for: agencies confident in their process and able to measure the result fairly.
• Downside: you carry more risk, and results can depend on things you don't control, so define the measure and the inputs carefully in a written contract. In advertising, any claims about results must be truthful and backed by evidence; the UK's CAP Code sets the rules.

Even without formal performance fees, pricing the outcome rather than the hours changes the conversation from "what does an hour cost" to "what is this result worth", and the price doesn't fall as you get faster.

6. Products built from the method

Once an agency has a proven process, it can write it down and sell it to people who can't or won't hire the agency:

• playbooks and templates, with no delivery cost and no capacity limit;
• software that automates a repeated step the agency has done by hand many times;
• deposits and waiting lists when a capped service is full, with a refundable deposit that holds a place.

These engines tend to feed each other: client work produces the method, the method becomes a product, product buyers who want it done for them become clients, and content brings people to all of it. Order matters: build the service first, then the product, then the software. More in how an agency can sell digital products alongside client work.

How to choose a model

Ask four questions:

1. Is the scope clear? If yes, project fees or packages; if not, time-based or a paid discovery stage.
2. Is the work ongoing? If yes, a retainer.
3. Can you measure the result fairly? If yes, consider pricing around the outcome.
4. Have you done it enough times to write down? If yes, consider a product.

A worked example

A two-person video editing agency starts with per-video project fees. Income swings month to month. It moves its regular clients to a monthly retainer for a set number of videos, which smooths income. It then caps the number of retainer clients to protect quality and opens a refundable-deposit waiting list. Finally, it writes up its editing method as a playbook for creators who can't afford a retainer. Each step builds on the last. (This is an illustration, not a real agency's figures.)

Show the full price

Whatever model you choose, show the full price, including any fees, before the buyer commits. In the UK, the CMA's guidance on unfair commercial practices covers hidden and drip pricing, and in the US the FTC acts against hidden fees. The number on the page should be the number on the invoice; see should you include fees in your advertised price.

Key takeaways

• The main agency models are hourly, project, retainer, productised, outcome-based and products.
• Time-based pricing caps income; retainers and packages make it more predictable.
• Pricing the outcome, not the hours, means your price doesn't fall as you get faster.
• Products built from a proven method add income that isn't limited by hours.
• Build in order: service, then product, then software. Show full prices up front.

FAQ

What is the most common way agencies charge?

Many agencies combine project fees for one-off work with monthly retainers for ongoing work. Hourly billing is common in consulting and early on.

Are retainers better than project fees?

They're more predictable, which helps with planning and hiring, but they need ongoing proof of value. Project fees suit clearly defined, one-off work.

Can a small agency sell products as well as services?

Yes, if it has a method it has used for paying clients. A written playbook or template pack is often the simplest first product.

Should agencies offer performance-based pricing?

Only where the result can be measured fairly and depends mainly on your work. Define it in a written contract.

How Asendify Makes Its Money shows how one small company stacks a capped service, books, software and deposits, and the order it built them in, without revenue figures or income promises.

More playbooks on other topics: https://www.asendify.co/books/

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