The Agency Profit Podcast

POINTS OF INTEREST * 0:00 – 0:14 – Introduction to Pricing Framework: Marcel introduces a universal pricing formula that applies across all billing models, setting the stage for simplifying agency profitability assessments. * 0:54 – 1:38 – Solo Episode Overview: Marcel explains that the episode will draw from his All Agency Summit presentation, covering how to price profitably and choose optimal pricing models. * 1:50 – 3:08 – The Best Pricing Model: Marcel emphasizes that the "best" pricing model is the one that consistently delivers the best margin, not a specific method like value-based or hourly billing. * 5:22 – 6:59 – Differentiating Pricing and Scoping: He defines pricing as determining what the client will pay and scoping as calculating what the service will cost the agency, advocating for separating the two. * 8:00 – 10:03 – Introduction to Delivery Margin: Marcel presents delivery margin as the cornerstone metric for agency profitability, explaining how to calculate it using agency gross income and delivery costs. * 11:02 – 12:34 – Setting Delivery Margin Targets: He recommends targeting a minimum 70% delivery margin to achieve healthy profitability after accounting for overhead and utilization inefficiencies. * 13:15 – 15:14 – Finding the Minimum Price: Marcel shares a formula to calculate minimum pricing: dividing delivery cost by (1 - margin target) and adding any pass-through expenses. * 16:39 – 17:16 – Introducing the Pricing Model Quadrant: The two vectors—client-perceived value and delivery risk—are introduced as key factors for determining the appropriate pricing model. * 17:49 – 19:17 – Understanding Value in Positioning: Marcel explains how niche positioning increases perceived value, affecting the pricing strategy and client comparisons. * 20:08 – 22:02 – Accounting for Delivery Risk: He discusses how accurately agencies can predict project costs and why risk significantly impacts pricing model selection. * 23:00 – 24:55 – Matching Pricing Models to Risk and Value: Marcel outlines when to use models like time-and-materials, abstracted time billing, flat fees, or value-based pricing depending on project risk and value. SHOW NOTES * All-in Agency Summit [https://allinagencysummit.com/] * Chris Dubois & Dynamic Agency OS [https://dynamicagencyos.com/] * Free Agency Profit Toolkit [https://parakeeto.com/toolkit] * Free access to our Model Platform [https://form.asana.com/?k=1OSsviJBE_luDSLhqMwoRA&d=1156118475728463] * Parakeeto Foundations Course [https://parakeeto.com/Foundations-course-launch-offer] LOVE THE PODCAST Leave us a review here [https://lovethepodcast.com/agencyprofit].

POINTS OF INTEREST * 0:30 – 1:31 – Meet the Guest: Marcel introduces Mike as a prolific author and entrepreneur, best known for Profit First [https://profitfirstapp.com/], and previews their deep dive into simplifying profitability for service businesses. * 2:00 – 3:36 – From Struggle to Simplification: Mike shares how his own entrepreneurial failures led him to journal his learnings, become an author, and dedicate his work to simplifying business for fellow entrepreneurs. * 4:00 – 4:58 – A Framework for Entrepreneurs: Mike explains the core business needs he addresses in his books—sales, profit, order, impact, and legacy—and how each book offers practical tools to tackle one of these pillars. * 5:06 – 6:31 – Rethinking Growth: Mike critiques the glorification of VC-funded hypergrowth, advocating instead for right-sized, owner-aligned businesses that are profitable and purpose-driven. * 6:38 – 11:02 – VC Realities vs. Bootstrapping: The conversation explores the downsides of venture capital—loss of control, high pressure, low founder pay—and makes the case for customer-funded, bootstrapped growth. * 11:18 – 12:11 – Constraints Drive Innovation: Mike explains how constraints, like taking profit first, can push businesses to become more creative and disciplined, leading to stronger, more sustainable operations. * 13:01 – 14:18 – Profit First in Practice: Through his investment work, Mike mandates implementation of Profit First in struggling businesses, using profit constraints to expose inefficiencies and force needed changes. * 16:00 – 18:23 – The Envelope System: Profit First functions like an envelope budgeting system for businesses, with multiple bank accounts directing funds to specific purposes—profit, taxes, owner’s pay, and operations. * 21:03 – 27:59 – Customizing for Agencies: Marcel and Mike discuss how to adapt Profit First for agencies, reverse engineering spending from lifestyle goals and avoiding industry average benchmarks. * 31:26 – 34:57 – Smoothing Lumpy Revenue: Mike recommends “drip accounts” to normalize cash flow for businesses with irregular income, ensuring income is recognized and allocated over time. * 35:03 – 37:35 – Tools and Support: The episode closes with a preview of the new Profit First app and a global network of certified professionals to support business owners in applying the framework effectively. SHOW NOTES * New Profit First App [https://profitfirstapp.com/] * Profit First Professionals [https://profitfirstprofessionals.com/] * Mike’s new Imprint [https://pagetwo.com/simplified/] LOVE THE PODCAST Leave us a review here [https://lovethepodcast.com/agencyprofit].

POINTS OF INTEREST * 1:02 – 1:38 – Intro: Marcel introduces the session as a condensed version of his All-in Agency Summit talk, aimed at equipping agencies with the key levers to diagnose and improve profitability. * 3:05 – 3:18 – 80/20 Profitability Focus: The goal is to give agencies 20% of the knowledge that provides 80% of the insight needed to take control of profitability, regardless of market conditions. * 4:28 – 6:27 – The Growth Trap Cycle: Agencies often get stuck in a cycle of hiring during growth, losing profitability, scaling again, and repeatedly encountering the same financial challenges at larger scales. * 6:42 – 7:01 – Identifying the Real Problem: Founders are urged to identify whether their agency's issue is inefficient delivery (indigestion) or lack of revenue (starvation) to avoid insolvency. * 9:01 – 10:06 – Financial Metrics Foundation: Understanding core financial metrics—especially agency gross income (AGI)—is essential to making better business decisions beyond tax reporting. * 14:24 – 18:05 – Delivery Margin as the Core Metric: Agencies should aim for delivery costs to stay under 50% of AGI, enabling better spending on overhead and stronger profitability. * 21:44 – 26:44 – Lever 1: Average Cost Per Hour: Lowering the average cost of labor through delegation and improved processes helps reduce delivery costs and increase profitability. * 28:03 – 31:55 – Lever 2: Average Billable Rate (ABR): Maximizing revenue per hour of delivery time, regardless of billing model, improves margins—either by pricing higher or working more efficiently. * 34:17 – 38:24 – Lever 3: Utilization Rate: Utilization measures how much team capacity is spent on client work; improving it by selling more work or adjusting staff size directly affects profitability. * 42:01 – 44:45 – Utilization Benchmarks: Weekly and annual utilization targets vary by role; producers should aim for 75%+ weekly, and teams should average 50–65% annually including all roles. * 45:27 – 49:26 – Impact of Levers on Profit: A case study illustrates how modest gains in utilization and ABR can shift profit margins from 10% to 40%, increasing valuation by up to 500% without hiring or cutting overhead. SHOW NOTES * All-in Agency Summit [https://allinagencysummit.com/] * Chris Dubois & Dynamic Agency OS [https://dynamicagencyos.com/] * Free Agency Profit Toolkit [https://parakeeto.com/toolkit] * Free access to our Model Platform [https://form.asana.com/?k=1OSsviJBE_luDSLhqMwoRA&d=1156118475728463] * Parakeeto Foundations Course [https://parakeeto.com/Foundations-course-launch-offer] LOVE THE PODCAST Leave us a review here [https://lovethepodcast.com/agencyprofit].

POINTS OF INTEREST * 1:04 – 1:46 – Introduction of John Meyer: Marcel introduces John Meyer, highlighting his experience as a successful agency owner, seller, and current business coach. * 2:10 – 2:30 – John's Current Focus with Leadmore: John explains his mission with Leadmore: coaching agency owners to avoid solopreneur traps and scale their businesses. * 2:30 – 3:11 – "No More Solo" Coaching Program: Details of John's group coaching for agencies in the $100k-$400k range focused on delegation and growth. * 3:11 – 3:37 – Coaching for Scaling Agency CEOs: Information on John's one-on-one coaching for CEOs aiming to delegate and further scale their agencies beyond $500k. * 4:32 – 5:30 – The Founding Story of Lemonly: John recounts the pivot from a broad digital agency to specializing in infographics for better focus and impact. * 5:36 – 6:50 – Strategic Niche of Infographics: How Lemonly's focus on infographics led to recognition and work with major brands like Netflix and MLB. * 8:38 – 9:25 – The Challenge of Scaling a Niche: The episode transitions to discussing the dilemma of staying niched versus widening services for continued growth. * 14:51 – 15:03 – Introduction to the Product Ladder: John introduces his framework of four ways service businesses can generate revenue. * 15:03 – 17:18 – Levels of the Product Ladder Explained: A brief overview of the custom, done-for-you, done-with-you, and DIY service levels. * 17:54 – 18:08 – Utilizing the Ladder for Increased Profit: The concept of moving clients up or down the ladder and repackaging services for better retention and profitability. * 26:58 – 28:31 – Avoiding Custom Work at "Done-For-You" Prices: John cautions against providing bespoke services while charging for standardized offerings. SHOW NOTES Connect with John: * Johntmeyer.com [http://johntmeyer.com] * LinkedIn [https://www.linkedin.com/in/johntmeyer/] * Instagram [https://www.instagram.com/johntmeyer/?hl=en] * YouTube [https://www.youtube.com/watch?v=mKGIX1tbUzo&ab_channel=JohnT.Meyer] LOVE THE PODCAST Leave us a review here [https://lovethepodcast.com/agencyprofit].

POINTS OF INTEREST * 0:00 – 0:23 – Small Cuts, Big Impact: Marcel explains how trimming small recurring expenses added up to $7K/month in potential savings. * 1:32 – 2:44 – Market Uncertainty Hits Everyone: Carson highlights how client indecision is stalling agency pipelines across the industry. * 3:04 – 3:23 – Opportunity in Unstable Times: Marcel frames uncertainty as a chance to optimize, streamline, and future-proof the business. * 4:02 – 4:36 – Sales Slowdowns and Staffing Pressure: Agencies must balance shrinking pipelines with existing team and overhead costs. * 5:02 – 5:25 – Avoiding Cost-Cutting Traps: Downsizing without strategy can hollow out delivery capacity and worsen long-term profitability. * 6:02 – 6:36 – Overhead First, Not Production: Carson shares a personal lesson on the importance of reducing overhead over core delivery staff. * 8:05 – 9:56 – Balancing Optimism and Cash Management: Founders must weigh hopeful projections against real cash reserves to avoid crisis. * 12:04 – 13:19 – Trigger-Based Decision Rules: Carson suggests creating clear, data-driven thresholds for when to take action—before it’s too late. * 17:03 – 17:22 – Austerity Exercise Yields Results: Marcel’s audit of seemingly small expenses uncovered significant monthly savings. * 21:01 – 22:37 – Smooth Transitions Are Possible: Fears around losing key people are often overstated—teams adapt and grow stronger. * 27:12 – 28:13 – Use a Payroll Grid for Clarity: Marcel introduces a framework for assessing roles, costs, and time allocation to guide decisions. * 34:10 – 35:06 – Profitability Benchmarks to Follow: Aim for ≤50% of income to delivery, ≤30% to overhead, and utilization of at least 50–60%. SHOW NOTES * Connect with Carson via LinkedIn [https://www.linkedin.com/in/carsonpierce/] * Get access to this model tool in the toolkit [https://parakeeto.com/toolkit] * Parakeeto Foundations Course [https://parakeeto.com/Foundations-course-launch-offer] * Free access to our Model Platform [https://form.asana.com/?k=1OSsviJBE_luDSLhqMwoRA&d=1156118475728463] * Podcast on benchmarking [https://parakeeto.com/blog/the-problem-with-benchmarking-and-what-to-do-instead-with-marcel-petitpas-ep-162/] LOVE THE PODCAST Leave us a review here [https://lovethepodcast.com/agencyprofit].