Big, one-off projects are exciting, but the real long-term value for agencies is in subscriptions.
Using a subscription model, you can build a relationship with your clients, giving your business a stable revenue stream through predictable monthly income.
Let’s explore why the subscription model could be the best fit for your design agency.
What is a subscription model?
According to the Global Banking and Finance Review, 70% of business leaders think subscription pricing is integral to maintaining the best clients.
In the same study, it was found that businesses with annual contracts lose customers at a rate of 9%, whereas those with recurring monthly subscriptions only saw losses of 3%.
A monthly subscription model works much like a telephone contract or energy bill — you bill your customers monthly for your services rather than doing everything in one lump sum.
As a design agency, paying for your own tools and supplies through subscription models is commonplace, whether that’s the Adobe suite, CRM programs or your office electricity bill. It makes sense, in many cases, to apply the same principle to the services you sell.
Why is this important as a design agency?
Subscription payments mean a stable income over time, rather than the anxious wait for a lump sum payment.
You’ll be able to plan projects and business ideas far more easily and give your clients a much more manageable fee by spreading the cost.
Recurring revenue is vital for the security of your company and keeps the focus on monthly deliverables, rather than a longer time frame.
How to move your clients to a subscription-based model?
You’ve decided subscription is the way to go for your business – but how do you do this effectively? As a design agency, you’ll be no stranger to strategy, and having a clear pathway for your clients to follow is integral.
Assess your current services
Do you have a clear picture of all your projects, hours worked and the cashflow you generate from them? If not, now is the time to get everything in one place so you can use it to make decisions.
Design projects can be very nebulous, with many moving parts, stakeholders with their own opinions and unforeseen setbacks that can change how each task is completed.
Make sure you account for everything when you’re defining a service, so that you can price it accurately as part of a subscription.
Here are some of the questions you should be asking:
- How long does each service take?
- Which services go well together?
- What is your minimum income per project?
- What expenses are essential?
- How many hours can your team work weekly, counting vacation and sick days?
Create subscription packages
Next is to create subscription packages you can run monthly. This could mean incorporating your existing services into a package that works for a certain type of client.
If you have a particularly brand-heavy client, for example, you may want to make a package that includes regular design updates and changes to their website and collateral material.
Packages can account for one-time fees by implementing discounts on them if they sign up for regular work, like graphic design.
And you could look at working with another contractor or part-time employee to add additional services — social media, for example.
Make sure that whatever you choose, you take into consideration how each project will affect your business and how much you need to sell to maintain your profitability.
Test your pricing strategies
Now it’s time to test your new model. Try it out on some clients, and see how it works. Are you getting the results you wanted?
No business change like this will revolutionise your business overnight, but if you clearly assess how each project is completed and how your clients respond to it, you can start moving more clients over.
If all goes well, you’ll have a regular stream of income you can use to grow your business, plan better, and try new products.
Get in touch with us today to talk about how a subscription model could benefit your design business.