14 ways to increase your profit

I've helped 11 agencies get past $3M ARR at 37% average profit in 2025.

The path to those numbers is almost always 12 to 15 small moves stacked on top of each other, each one worth a few points of margin.

Tried to fit them all in a LinkedIn post the other day and couldn't. So I'm dropping 14 of them here, organized into the four categories - pricing, retention, capacity, and cost structure.

Most of these you can implement inside a week.

Pricing

The first move I'd run, before anything else, is what I call the 30/30 diagnostic. Two checks. If your sales close rate is above 30%, you're priced too low - buyers should be pushing back on price more than they currently are. And if your direct delivery cost is above 30% of revenue, you can't scale without losing margin. Both of those numbers tell you something specific about where the leak is.

Second move - take the 20 accounts paying you the lowest effective hourly rate and raise their prices. Either match the scope to the new price, or trim scope to match the old price. Either works. Doing nothing doesn't.

Third - productize wherever you can. Charge for the output, not the hour. Hourly billing puts you in a race to deliver less, which clients eventually figure out.

Fourth - different teams need different revenue-to-salary ratios because they don't behave the same way. General delivery should hit 3.33x. Ad buying or SEO, 4 to 5x. Creative, 2.5 to 3x. Video, 2.5x. If you're benchmarking every team against one number, you're either underpaying yourself in some teams or overpaying in others.

Retention

Run a 100-day onboarding plan with every new client. Three pillars - expectations, education, and an experience worth staying for.

Then audit your churn by account manager. This is the one most agencies have never done, and it's almost always the cleanest way to find money. One AM running 2% monthly churn and another running 18% inside the same agency is more common than you'd think. Coach the bottom or replace them. Either fix is fine. Pretending the average is the truth is what kills you.

Quarterly Business Reviews with every client every 90 days. Indefinitely. Every account, no exceptions.

Capacity

Calculate Direct Labor Efficiency Ratio for each delivery team. Formula's simple: revenue that team manages, divided by the billable salaries inside it. Target is 3.33. Below that, the team is losing money for you, full stop. You won't see it on the P&L because it's hidden inside aggregate gross margin and non payroll costs, but it's bleeding.

Track team utilization weekly - billable hours divided by available hours. Teams feel maxed out at around 50%. They genuinely feel that way. The only way to know the real number is to count the hours. A lot of agencies we audit are sitting at ~50% even when the team swears they're at 80.

Which leads to the next one - before you approve any new hire, restructure how the existing team's work is distributed. Most "we need another body" conversations are "we need to redistribute the bodies we already have" conversations. New hire is the most expensive answer to that problem.

And productize repeated work so junior staff can deliver it instead of senior staff.

Cost structure

Audit your contractor spend line by line. I've personally cut $120K out of a single P&L without losing any output.

Replace yourself in this order: admin first, then delivery, then marketing, then sales, then leadership last. The reason sales goes second to last and not first - founders close deals at higher rates than basically any salesperson they hire. You give that lever up too early and it costs you more than the salary you saved.

And the structural one. Cap non-billable team costs at 15% of revenue. Cap SG&A - software, rent, marketing, overhead - at 20 to 25%. That's how you protect a 30%+ profit margin structurally rather than fighting for it line by line every quarter.

That's 14.

There are probably another dozen I could talk about.

The full set, in the order I'd deploy them inside a real agency, is what I'm walking through on the 14th.

Workshop is Thursday May 14th, 2:30pm ET for 90 minutes live.

Capped at 30 seats.

Workshop + 1-on-1 diagnostic + completed profit audit + recording + live Q&A.

https://www.agencyacquisitions.io/90min-workshop-may-7-2026/

Nick

P.S.

10 signs your agency is about to hit a ceiling:

1. You're the only one who can close deals

2. Your team asks you before making any decision

3. Your best people are starting to look elsewhere

4. Every new client feels harder to service than the last one

5. Your margins are shrinking but your headcount keeps growing

6. Your onboarding is different every time depending on who's running it

7. You say "we need more leads" every month but your churn is above 5%

8. You keep adding services instead of getting better at what you already do

9. You're saying yes to projects outside your niche just to make payroll

10. You're working harder than you were at half the revenue