Since a long time ago, companies hire agencies for help in design, accounting, social media management… you name it. While this was happening for a long time and is now considered the norm, there’s a new storm that will destroy agencies, especially the small ones.
This storm is formed by what I call agencies of one. They are individuals, offering bundled end-to-end services to customers, for a monthly recurring fee. This is just freelancing! you might say, but it’s not. This is a completely different game. I’ll tell you why:
First, freelancers tend to be paid an hourly rate, or by the project. It’s rare when a freelancer works with a monthly rate. That’s more of employment than freelancing.
Agencies of one charge a monthly recurring fee.
Second, freelancers and agencies have always been adapting their offerings to customers. A customer sends a request, the freelancer/agency studies it and gives an estimation, both parties agree on a price, and work starts.
Agencies of one do not adapt their offering for customers, they define their offering.
To recap, the agencies of one define their offering, pricing, and terms. In addition to that, they’ll also sell it as a subscription.
Freelancers and agencies say things like “Let’s talk about your next project. We’ll be happy to help.” Agencies of one say things like:
Get unlimited requests and revisions, source files included, for $2,499/m.
This might look like an example, but it’s a real deal from DesignJoy.
Brett, the designer behind DesignJoy, is acting as an agency of one, making over 1 million dollars per year in recurring revenue. All while running everything himself.
This freedom in defining the offering and pricing will open a new world for these individuals. The control over the offering will let them use automation heavily to move quicker, the economy of scale to reduce their costs, and the freedom to design a workflow that fits their life.
While this might seem like a good thing for individuals only, it’s a huge relief for companies.
Working directly with a person gives a company an insurance about the final product. In the end, you’re interacting with a real person’s portfolio, they worked on what you’re currently seeing, and you should expect an output closer to that.
They will also get superior service, quicker, and cheaper than hiring a full-time employee or a big agency. If we take DesignJoy as an example, a company can outsource their entire design process for 2,499$/month.
In the near future, this storm of agencies of one will take over the small businesses market and take the majority of the pie leaving actual agencies behind. Agencies on the other hand need to step up their game and target big companies with big projects needing multiple teams to justify their cost.
I’m @elazzabi_ on Twitter.
One response to “The “agencies of one” storm is coming”
While this sounds incredibly inspirational, the math doesn’t add up:
If DJ revenue is more than $1M USD / year then that is about $20K / week. Since DJ charges $2500 / month (approx. $575 / week) then we can work out how many customers DJ must have since 1 customer is worth $575 / week then to reach $20K / week DJ must have 20000 / 575 = 35 Customers.
Now that’s great numbers for a small SAAS startup but with DJ the work is apparently being carried out by Brett as a solo worker. Now let’s say he works 40 hours / week and about 5 hours are admin time then he has 35 hours / week available to work for each client. That means an average 1 hour a week per client!
It’s possible that not all clients are active at the same time but still if I had 35 active clients at the same time who could demand work from me with 2 days notice and I have no one else to help with the workload then it could be a recipe for burn out. So I am curious how Brett manages this?