The 5 Agency Growth Pathways: From Hustle to High-Margin Scale
What Got You Here Won’t Get You There
You’re sitting in your agency’s conference room, staring at the numbers. The work keeps coming. Clients are happy. Your team is running at full speed.
And yet—profit remains elusive. Margins are razor-thin. Growth feels like running in place.
It’s not effort that’s failing you. It’s the business model.
For decades, agencies have operated on a time-based revenue model—pricing work based on hours, deliverables, and effort rather than the expertise and business outcomes they drive. But that model is breaking down.
Commoditization has reduced agencies' pricing power, forcing them into price-driven competition.
Scope creep erodes margins, forcing agencies to do more for the same fees—without additional revenue.
Clients are shifting to pricing models that align investment with impact, yet many agencies are still selling execution.
40% of global CEOs say their businesses won’t be viable in a decade without transformation. (PwC’s 26th Annual Global CEO Survey).
The same is true for agencies still clinging to outdated pricing and service models.
But don’t take my word for it. Here’s what I repeatedly hear from agency leaders—those chasing growth the way the industry taught them:
“Over the years, we added new services to satisfy clients and win new business. It worked—until we lost sight of who we were. Our leadership and staff aren’t aligned on the clients we should serve or the work we should do. Every pitch sounds different, and we tend to rely on ‘great client service’ as our value prop. But that just leads to overpromising, burning out our teams, and shrinking our margins.
"We've grown quickly, but we’ve done it by default rather than by design. And as we’ve grown, complexity has increased. If we’re not thoughtful about it, the costs will eventually outweigh the benefits."
Does any of that sound familiar?
The agencies that break through don’t just refine their services—they reengineer how they create, deliver, and monetize their impact.
The following roadmap outlines the five pathways we’ve observed agencies move along to transition from transactional, project-based vendors to high-margin, market-leading firms.
Not a Linear Path—Agencies Often Operate on Multiple Pathways
It’s important to note that agencies may not keep to just one pathway. Certain parts of your business may operate across two or more pathways simultaneously—for example, offering fixed-fee projects (Path 3) while also developing productized solutions (Path 4).
Or, as Jaime Robinson, co-founder and CCO of Joan, told AdAge, her independent shop had a completely deliverables-based compensation model when it was founded in 2016 but has since evolved to add back in traditional pricing based on client needs.
The goal isn’t to travel on any one pathway—it’s to stay in tune with the outcomes your clients are looking for and evolve your business model to support them while also achieving scalable, high-margin growth at every turn.
Path 1: Transactional Services (Hourly Pricing)
"We’re doing more work than ever, but it never feels like we’re making enough.
“Every time a client needed something new, we added it. Every service seemed like a smart addition—until it wasn’t. Now, we’re stretched thin, inefficiencies pile up, and our margins are shrinking.”
Most agencies start here—saying yes to everything, outworking the competition, and relying on ‘great client service’ as their differentiator. But without pricing power, they compete on cost, which leads to low margins, unpredictable revenue, and overworked teams.
Revenue and profitability reality of this path:
❌ Low margins due to cost-plus or time-based pricing.
❌ No pricing power—clients push for discounts and compare agencies on cost.
❌ Workload scales with headcount, making growth costly and unsustainable.
The signs that you're here:
Pricing is based on time or scope, not value.
Clients see you as a vendor, not a strategic partner.
Growth feels like running on a treadmill—constant hustle, little gain.
Decision point: Do you keep chasing every project, or will you commit to a focused business strategy that leverages your firm’s differentiating strengths?
How to break through:
✅ Stop being a generalist—define a focused business strategy and own a niche.
✅ Move away from hourly pricing and frame your value around client outcomes.
✅ Stop chasing low-margin work and focus on high-value clients willing to pay for expertise.
Path 2: Specialized Expertise (Hourly Pricing)
"Clients hire us because of what we know, not just what we do. But even though we’re known for our expertise, every project still feels like a reset. Some services are profitable, but others barely break even.”
Agencies traveling on this path have built a reputation for doing one or a few things exceptionally well—but they’re still stuck in a custom, project-based revenue model.
Revenue and profitability reality of this path:
✅ Better pricing leverage, but still tied to labor and execution.
❌ Clients still focus on deliverables and fees despite sharper strategic positioning.
❌ Revenue is still project-based, leading to feast-or-famine cycles.
The signs that you're here:
You win business based on reputation, but pricing pushback persists.
Revenue remains unpredictable—each new project feels like starting over.
Some services are profitable, while others barely break even.
Decision point: Do you continue selling expertise as hourly, customized services, or do you shift away from pricing based on billable time and customized engagements?
How to break through:
✅ Develop repeatable frameworks to better deliver, monetize, and scale expertise.
✅ Shift toward deliverable-based pricing rather than effort-based fees.
✅ Align marketing and sales messaging around fixed-fee pricing.
Path 3: Output-Led Growth (Fixed-Fee Projects and Deliverables)
"We don’t price by the hour—we price deliverables and projects. But that doesn’t stop procurement from grinding us down. They pull out industry benchmarks, compare us against the lowest-cost provider, and tell us what we ‘should’ charge.
On this path, agencies shift from effort-based pricing to deliverable-based, fixed-fee pricing models. However, procurement often tries to compare the price of a deliverable to standard industry rates, failing to recognize the agency's unique expertise and strategic impact.
Revenue and profitability reality of this path:
✅ Higher-margin engagements—pricing is based on deliverables, not hours.
❌ Procurement remains a barrier—deliverables are still about execution, which procurement views as commoditized and a target for negotiation.
❌ Still reliant on labor-based scaling, requiring headcount growth to expand.
The signs that you're here:
Clients negotiate down your fees even though you don’t price time.
Pricing power improves, but engagements still feel custom, like you’re reinventing the wheel each time, and delivery remains manual and labor-intensive.
Scope changes trigger conversations about time—conversations default back to hourly rates when there’s a scope change.
Decision point: Do you continue customizing engagements and selling commoditized services, or do you productize your strategic value?
How to break through:
✅ Structure your unique expertise into high-margin solutions and begin to divest low-margin work.
✅ Introduce tiered pricing options tied to the value of your solutions.
✅ Move beyond price comparisons with scopes of value and cross-selling architecture.
Some agencies also begin to explore performance-based pricing when they turn onto this pathway—charging based on measurable business outcomes rather than fixed fees. While this can be lucrative, it depends on having full access to client-side data, control over execution variables, and alignment on what 'success' means. Most agencies that attempt it still combine it with fixed-fee or productized models to maintain predictable revenue.
Path 4: Productized Value (Solution-Based Pricing)
"Our clients don’t buy our services—they invest in our proprietary solutions because they solve high-value business problems. Thanks to our ecosystem of connected offerings, clients often increase their investment because they see tangible strategic value, not just execution. But we’re at a crossroads—do we expand with people-based solutions, or do we invest in tech-enabled products?"
On this path, agencies productize their value by monetizing their intellectual capital as structured, scalable solutions to their clients’ critical problems.
Revenue and profitability reality of this path:
✅ Predictable revenue streams—solutions, programs, and products with structured pricing models, including subscription or licensing where appropriate, ensuring value alignment without relying on performance contingencies.
✅ 2x-3x faster revenue growth—recurring revenue and efficiency gains unlock scale.
✅ Higher AGI per FTE—revenue grows without proportionally adding people.
The signs that you're here:
Deal sizes increase from your proprietary solutions, and clients often cross-selling themselves within your ecosystem.
Profit margins expand as work shifts from customized project execution to structured, scalable solutions.
Pricing resistance disappears because clients see the strategic impact of proprietary solutions, not just execution.
Decision point: Do you double down on your expertise by solving new problems for your existing market, or do you look at new markets? Or do you take the next leap—leveraging technology to scale beyond human constraints?
How to break through:
✅ Productize your firm’s value through scalable tech-enabled offerings—AI-integrated applications or SaaS.
✅ Refine pricing models for subscription, licensing, or performance-based revenue.
✅ Optimize delivery with AI automation so revenue grows without adding more headcount.
Path 5: Market Leadership (AI, Proprietary Frameworks, & High-Value IP)
“We don’t chase clients—they come to us. We set the standard in our space, and we charge accordingly. Clients expect to pay a premium for access. We’re not just an agency anymore. We shape industry conversations, monetize our IP, and operate more like a technology-driven consultancy."
On this path, agencies move beyond service-based economics and beyond solution-based business models, positioning themselves as category leaders and market architects.
Revenue and profitability reality of this path:
✅ Defensible differentiation—ensuring competitors cannot replicate your value.
✅ Premium pricing power driven by defensible differentiation—proprietary solutions, industry influence, and a revenue model decoupled from time and execution.
✅ High EBITDA multiples—your firm is valued as a scalable enterprise.
How to Stay at the Top:
Own proprietary data—clients and competitors license your frameworks.
Embed AI into your business model—not just as a tool, but as an integral part of your value.
Build ecosystem partnerships—align with complementary firms to amplify demand
The Most Dangerous path Is the One You Stay on
Where are you now? Where do you want to be? Which pathways will get you there?
The agencies that fail to evolve won’t just struggle to grow—they’ll struggle to survive.
If your agency hasn’t shifted away from time-based models or isn’t proactively seeking a path toward scalable, high-margin growth, you’re already falling behind.
The firms that win? They’re moving now.
They’ve stopped chasing revenue and started engineering scalable, high-margin growth.
What pathway are you on—and what will it cost you to stay there?
Let’s map out a direction for your firm—before the market makes the decision for you.
