In my opinion every agency should at least have 3 things to sell.
A front end offer, add ons, and a back end offer.
The front end offer has one goal: get you new customers.
You should not worry about making a profit from your front end offer. Your goal should be to break even.
As your customers also purchase add ons, and a small percentage pick up your back end offer, you end up being profitable whilst having created a machine.
The reason I say “machine” is because the idea is for you to be able to advertise your front end offer, have people buy it without phone calls, emails, meetings, and proposals. Once you got customers, selling them more stuff, and therefor making a profit (since the cost to acquire the customer has already been absorbed by the front end offer) is easy.
Pretend you want to make money online by selling web design.
What most will do is decide to charge $2,000 and go out there looking for people willing to pay it.
They’ll spend the vast majority of their time looking for prospects, cold emailing, cold calling, going to meetings and crafting proposals which mostly get rejected.
They’re in a constant chase of getting the next client.
Now let’s transform that business into something that we can scale and automate.
Let me take that $2,000 web design offer, make it $500. Find a freelancer to deliver it to the clients for $250, which leaves me another $250 in “profit” that I will spend on advertising in order to find people wanting to buy this $500 offer.. without those cold calls, emails, meetings, and proposals.
Once I got them to buy the $500 web design offer, I will offer them some add ons such as a new logo, done-for-you copywriting for the site, and professional images.
Now maybe the average order value goes from $500 to $600 allowing me $350 in ad spend in order to acquire a client.
But again, my goal is actually to break even, so I will keep advertising to more and more people until my cost to acquire a customer is actually $350.
So even if I start off only paying $200 to acquire a customer, I will push my ads to more and more people until the point it reaches $350.
Then, as you know, we have customers coming in, but no profit.
That’s where the back end comes in, so in this case there’s a few things that make sense.
The first that come to mind are ongoing support/maintenance which could be a monthly retainer. Probably wouldn’t be a massive fee as the workload wouldn’t be too dramatic, but a really good back end would be helping them with SEO as well as Pay Per Click advertising from for example Google and Facebook.
There you go, we just designed an agency that can be automated and profitable, where you can outsource most of the work, and the client acquisition can be put on autopilot.
Do you see how much better this model is than just offering a $2,000 website and spend all your time trying to get a new client?