10 Ways to Boost Your Profit Margin

By Vsourz - 07 July 2020
When you’re busy running a web design agency it can be tempting to simply keep pursuing new clients and more work without stepping back to take the longer view. Just pulling in income is only one part of the equation, however, since the profit margin involved is the metric which will define the success or failure of your agency.

The good news is that there are ways your agency can make more margin, and many of these tips involve relatively simple steps which will improve the efficiency of your website design agency as a whole.

By being completely honest about the profit margin you’re currently pulling in, and analysing exactly where the inefficiencies lie within your processes, you’ll be able to develop an approach which boosts your company profit margin without reducing the quality of the work you deliver.

The ways you can make more margin cover a range of approaches, from outsourcing aspects of the service, to pricing for quality rather than value and concentrating on building long term relationships with clients. By taking a strategic view and introducing the changes which fit with the wider ethos of your web design agency, you’ll be able to drive profits higher at the same time as establishing your brand as a byword for excellence.

Undertake an Honest Audit

Before creating a precise roadmap of the ways your agency can make more margin you have to build an honest picture of the current state of play. The current profit margin for your web design agency will create the baseline from which you operate, and the yardstick against which you measure whether things are getting better

Analyse every stage of the design process to spot those areas in which you’re working inefficiently, and put a price on every moment of the working time you analyse. Break down the price you charge for every part of the service you deliver alongside how much it costs you to deliver.

Driving margins higher will, to a large degree, be driven by pushing costs down while being able to create more value and charge proportionately. Which sounds simple but is a multi-faceted thing to achieve. Once you’ve created a full picture of the current state of affairs, set yourself a realistic target to aim toward.

Scalable processes and services

As your web design business grows there’s a very good chance that it does so organically. This means that the processes you use will have been adapted piecemeal to accommodate increasing demand in the form of more clients and bigger projects.

You need to break down every aspect of service delivery into individual units – such as invoicing, project management, client onboarding and business development – and standardise the processes used to deliver these services.

Standardised processes of this kind are easier to scale up as your business grows and demand increases, and also make it simpler to create projections for individual projects. If you know as exactly as possible how many hours a project will take to deliver, you’ll be much better placed to create a pricing plan that maximises profit margins.

Pricing for value

At first glance pricing may seem simple; work out how much some aspect of web design services costs to deliver (usually in terms of working hours) and add a defined profit margin. While it has the advantage of clarity, however, this method may see you underselling yourself considerably.

You can drive margins higher by basing prices not on the cost of a service but on its value – in other words charge what you feel your service is worth.

Take into account factors such as your track record of delivery, any areas of specialism you can deliver and the impact which your work will have for the client when creating your pricing structure. If you work to refine the quality of everything you deliver, then you’ll find that clients are willing to pay the higher prices you can charge in return for a guarantee of quality.

Offer premium services

While a percentage of your client base will focus on sourcing work as inexpensively as possible, there will be others who are willing to pay more for premium quality work. For that reason, you should have the web design services in place to be able to deliver that work and pull in increased cash flow.

In time, delivering premium services of this kind will create a ‘virtuous circle’ in which clients are drawn to your web design agency because of your reputation for excellence. This reputation will, in turn, enable you to charge premium prices.

Retain your clients

It’s all too easy to focus the majority of your working time on putting together an ever expanding list of clients, but the fact of the matter is that profit margins are more likely to be increased through retaining existing clients.

When you work with existing clients you tap into a wide range of short cuts to delivery, reducing business development time and taking advantage of efficient delivery methods with a proven track record of delivery and client approval. Every new client, on the other hand, implies a period of on boarding and establishing working methods which are suited to both your agency and the client. Repeat business, for these reasons, is generally more profitable business.

Outsource when possible

Taking on new members of staff in order to deliver new projects is an expensive business. The overheads involved include the levels of administration linked to taking on new employees, plus the working space, equipment and other overheads which can’t be avoided.

By outsourcing the aspects of your work that may not be core, or you only need from time to time, to the right partner, however, your web design agency will be able to expand the available workforce quickly and simply for much less cost, and at the same time will be left able to concentrate on core business activities. At the end of a project you’ll simply be able to stop working with the outsource agency rather than trying to find on-going roles for new employees.

Streamline business development

Chasing new business may seem to be the most important aspect of bringing in greater profits, but it can be streamlined and rationalised to cut costs and increase the effective targeting of fresh clients.

Put in place systems of filters which prospective clients will pass through in order to ascertain whether they are suited to the services you offer and the way you work. At the same time, create re-usable templates for aspects such as pitches, workflow and proposals, rather than having to create them from the ground up every time.

Time tracking

The phrase that ‘time is money’ is a cliché, but it is a cliché which has endured because it happens to be true. Every moment your employees are working is a moment which is costing you money, and those costs are eating into your profit margins.

That’s why it pays to track exactly how your team are spending their time. Time tracking software can be utilised to do this in depth across every aspect of delivery, enabling you to focus sharply on those areas of inefficiency which are dragging your margins down.

Look after your clients

Although the focus on finding new clients is easy to understand, your profit margins will be boosted if you take the time to focus on your existing clients. Analyse exactly what you’re doing for them and ask yourself if you couldn’t be doing more. Upselling new services is a quick and high impact way of driving income higher, and the organic growth of an existing account is a pain free means of growing your business.

At the same time, you should make sure that you have a relationship with the client which goes beyond simply delivering what they’ve asked for. If you’re aware of a new platform, method or trend which would benefit their business make sure that you let them know about it, and about how you could leverage that opportunity for them.

Establish authority

You can charge much more for your services if you establish the fact that you’re an expert in the fields of web design and marketing. You may think that the work you deliver does this in and of itself, but you can do much more to underline your authority.

Share insights, thought leadership and new ways of thinking on your website, via blog posts and across various social media channels. Create a situation in which a client, upon hearing of a new app or platform, will instantly log on to see what you’ve had to say about it. Becoming a trusted source of information will lead naturally to being a trusted deliverer of services.

These tips can be combined to drive growth and ensure that the growth in question is targeted at areas which deliver the highest profits. Establishing your web design agency might revolve around creating your working structures and persuading clients of the value you offer, but the next step is to maximise profit. Create a working environment in which every phase of every project is examined in depth to ensure that it is being delivered for the minimum cost, and that you’re able to charge against the value you deliver to your clients.

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