If DesignJoy is making $1M a year selling $2500-$3000 month subscriptions, and there's only one person doing the work, then he's got around 30 clients for whom he is doing "unlimited" work every month.
As a contractor, I once had 9 ongoing projects for about 2 weeks, and that was an insane amount of work and context juggling. Handling 30 active clients for a year, let alone a career, seems impossible.
So either the clients aren't asking for much (which is most likely) or I'm missing something. I assume many bigger companies would happily replace a staff member, or a staff member's valuable time, with a ~30k/year contractor. Critically, these companies wouldn't feel the need to "get their money's worth" by keeping the guy busy every day. However, the smaller companies most freelancers see as their bread and butter are more cost sensitive, and will nickel and dime you as much as possible.
Are there enough big, monied companies to constitute a "storm", which I take to mean a shift in the business model for freelancers and boutique contractors? I dunno about that. I'd guess no, offhand.
Seems like DesignJoy has create a neat niche, which is awesome for him! I don't think it scales to the "disruption" level as this article implies.
Elsewhere on the web, he explains his business model:
"There seems to be some correlation between size of the company and the quantity of their needs. The smaller they are, the more needs they have. The opposite is true as well. So yes, many clients pay $2k+ per month and may use the service once or twice a month, equating to under an hour’s worth of work."
The big companies are paying for on-demand access as insurance. They aren't stupid. They fully understand they're paying $2K+ per month and only using service for an hour or two each month.
What becomes challenging at those rates and client densities is managing a tail risk of a collision of multiple big clients suddenly wanting services at the same time. You're just playing chicken with that happening, until you can scale your offerings and revenue up to where you can reduce client density to where you can handle the crunch better when it happens.
Or in that moment you realize demand for your service exceeds supply and the correct response is to raise your rates until you have a reasonable workload. If they won’t pay $5k+ monthly retainer for someone who knows how to build their system, surely they have a cheaper alternative. Meanwhile the clients with budgets you really want to work for are happy to pay your fees because they’re cheaper than your comparable salary. If you’re selling a monthly retainer and hit that collision you describe, you’re in a fantastic position to negotiate rates. Better to be on a use it or lose it commitment than accruing unspent hours, otherwise yeah you can get screwed.
This is kinda brilliant. Every SaaS has some % of customers who pay month over month even though they rarely or never use the service. If you can just get a few of those customers at a price point that is extremely meaningful to you as an individual but the customer is big enough that it’s not meantinful to them, you can fire all the actual customers and coast.
IMO some people have an unhealthy need to find the best deal possible (usually the cheapest), even if it takes so much time it is not worth it.
The same way that some public contractors offer the cheapest rate knowing that it will be inflated, or that low-cost airlines sells you the cheapest ticket, later adding extra luggage, food, and healthy credit card processing fees, a strategy is to give these people what they want.
I could believe after they have their unlimited service, a lot of the customers do not make use of it. In many of these cases the decision making at the client might even be the bottleneck.
if you look at the security space, this is exactly what cloudtrike is, or at least is aiming for. They want to do your SIRT, your red teaming, your malware collection, etc etc.
Then you got microsoft with teams, office, and such trying to be the agency of one for your collaboration needs.
Google is fighting to be your one stop shop for advertising.
The "one" in the article means one person doing all the work. Not a big org providing SAAS or such like MS/Google.
I don't think it would work for something like software, where the last 10% takes 90% of the time. Maybe you could do it for prototypes, but do any companies really need a "constant prototype" contractor?
One person doing all the work and needs of a project does happen, but its rare. I would just be cheaper to hire someone full time, so this usually happens in specialty software where its hard to keep hiring head count to do it.
> I don't think it would work for something like software
Except that it happens all the time. its fairly prevalent.
> Maybe you could do it for prototypes, but do any companies really need a "constant prototype"
Freelancers have been kept on retainer for quite a long time. It sounds like the author just wasn't familiar with that business model. Which is fine - I don't want to be harsh on someone just because they had a knowledge gap - we all do. But there is more to being on retainer than just a monthly fee.
There still is often hourly estimation because the retainer frequently will be for a set number of hours, with additional hourly rates if you go over that limit. (Freelancers who offer unlimited hours get in trouble fast.) Companies therefore still triage their needs, to try to get as much done in the set hours without incurring too many additional hours.
Retainer arrangements and subscriptions look similar but are not the same thing. A retainer is a bucket of hours sold gym-style, use-it-or-lose-it. Within those hours, the customer has a lot of flexibility with tasking their contractor (what the scope of work is, and what the scheduling and staffing are).
Subscriptions are distinctive because they include terms based on defined outcomes. You're getting X done every month (X may also be use-it-or-lose-it, but it isn't ever Y or Z), and the vendor (mostly) decides how best to accomplish X.
Retainer agreements tend to have bespoke terms; if 5 clients retain you, chances are you have at least 3 different sets of terms and 3 different scopes of work. Part of the definition of a subscription, again, is that it's the same work for everyone you sell it to.
Neither retainer freelancers nor subscription services should be charging hourly; hourly is a consulting anti-pattern.
> Neither retainer freelancers nor subscription services should be charging hourly; hourly is a consulting anti-pattern.
It's easy to say that but hard to avoid hourly. I say that as somebody who's read your threads and those of patio11 for a decade. I've run my 1-person business [1] for over 15 years and whilst I would like to break away to value pricing I'll still take money-for-time over fixed priced bids any time.
Why? Risk transfer. With fixed bid the risk and management of scope creep is on me. With hourly, on the client. And not having to micro-detail everything in the spec before it gets signed off to make sure no time sinks pop up is nice.
I don't know if the breakthrough I've never managed to escape time based billing is mindset, target audience, offering or location (UK), but I haven't made it happen.
People have been saying this here for 10 years, and, respectfully, no, it's not hard to escape this trap. Every project we bid at Matasano had the same terms: a whole-project cost estimate (broken out in units of days or weeks, allocated to milestones), and a clause in the proposal and the SOW that said overages were billed pro-rata additional days. Customers want to see a good-faith estimate of the project cost --- every customer for every service wants that --- but in my experience with hundreds of clients, not one has ever pushed back on T&M contract structure.
Tell your clients what the project is going to cost, and then work hard not to blow past that estimate. If you go over and it's your fault, eat the overage. If you go over because the customer wasn't ready for 3 days at the calendar start of the project, bill them the overage.
Unless your clients are whackjobs, nobody is ever going to take recourse to the contract terms and the law department. Just engaging the lawyers at all will create costs that swamp the overage dollars. Your customers true recourse is simply never doing business with you again.
If you want to do straight, metered T&M, that's fine. I think it's suboptimal but cromulent. But even then, there's still no reason to ever give your clients an hourly unit of work. Just bill days.
Interesting, for larger contracts the way you bid at Matasano is how mine come out. Scoping engagement, then costs broken down as a guide.
My reading though is what you were doing was still time and materials. Sure you're billing in units of days or weeks, but as I understand it the underlying principle is the same as hourly billing: track time and charge for it. It's not linked to the value of outcomes, it's not eating up unknowns that come out and each has to be negotiated with the client ("We didn't expect $EvilCorp we're integrating with would take 2 weeks to answer every query").
In another comment you say "Time and materials billing does the opposite of keeping everyone on the same side". Can you expand on how you kept people on the same side at Matasano?
> and a clause in the proposal and the SOW that said overages were billed pro-rata additional days.
Did you have an approach that stopped each one becoming a lengthening negotiation with the client over what were true overages and which you should eat? I have had plenty of brusing conversations doing this and in my experience the client's expectation of what's "My fault" can be unreasonably wide, which is one reason for looking to other ways to price.
It absolutely was T&M, but that's not how it's sold. If you read the proposal the way ordinary humans read a proposal, skimming to the price tag, what you'd see is a price breakdown for the whole project, complete with a "total cost" as the bottom row. This isn't some magical thing Matasano came up with; my Matasano partners were from @stake, and the @stake people were previously Cambridge Technology Partners people, and those people were taught how to structure proposals by their forebears before them. Presumably Paul Revere was involved at some point.
We never had any negotiations about overages. If we were going to bill an overage, we'd tell the client, and if they told us "no", the project would presumably have stopped there. It didn't come up.
I'm not convinced a random solo consultant can get away with the same contract negotiations as an established, well-known agency, even assuming it would rational for both parties to allow it. I'd love to be convinced (and I'm all on board with billing days).
Yeah, its stated as hourly but the real deal is 8-8-8-8-8 across the board...and the manager stamping your timesheet loves this. For some reason lawyers are stuck with tracking every 15 minutes.
Because when you're billing for a day, you either worked on a day or you didn't. Not working on a day you're ostensibly billing for is anomalous enough that you're going to bring it up yourself with your client. For daily billing projects, timesheets are mostly just not a thing. We had a couple customers that used them, but they were staff-aug projects.
I would consider it but it would have to be very repeatable and well defined and at that point, why haven’t I automated it? The posited Agency of One sounds pretty much like a beginning-stage SaaS while you’re doing things on pen and paper or a spreadsheet until you’ve figured out what you need to actually build.
Otherwise, that seems like a fast track ticket to burning out. Retainer model and selling bundles of hours is going to keep your client incentivised to not waste your time.
This is pretty funny to me. I just built https://gloutir.com, essentially a micro agency that's just ... myself.
I realized working for large agencies that I'm already the person doing all the work, so why not get compensated accordingly? It was also amazing to me the amount of outsourcing that happens at an agency, most of them really don't have inhouse designers or developers (regardless of their massive size).
Beautiful site but I think you're kind of only talking about yourself. I would address the problem points companies have and talk about them. In a sense your are speaking in abstracts.
Fair points. I think the main pain points companies have, that I touch on, are turnaround times, cost and creative ability. I could lay out those ideas in an easier to consume format instead of just large paragraphs though.
Multiple people are liking your site, but I shall express a dissenting opinion (with details of specifically what I disliked): yes, it has character, but it was significantly overpowering and I didn’t like the presentation at all. (Its content I genuinely can’t comment on: I’ve been too severely distracted and disconcerted by the presentation.) A big unreadable title (the style of lettering makes it difficult to discern which strokes belong to which letter, and having it 500px tall against a distracting background makes it even harder to read, it’s just so big) with a fixed-attachment background (I honestly don’t know if I’ve ever found a case where I think that was actually warranted); then continual blocks of text in NewEddy, an uppercase-only display serif font that’s simply hard/uncomfortable to read. Body text in a monospace face, which is not good for reading in English (any time I come across blog posts that I actually want to read but where the site is using monospace body text, I nuke that style and breathe a sigh of relief). Then the marquee with parallax at the bottom somehow managed to be enter a class of disconcertion of its own, and that was before I discovered it was supposed to be a video (I have autoplay turned very firmly off, thank you very much), which improves some aspects and makes others worse. And finally I’ll mention the excessively low-contrast header that also collides with what’s underneath it at any given moment, and the footer footnote’s similarly badly low contrast.
Well Chris, you're not my target audience, and that's ok.
The site is intentionally very over the top, and not everyone will like it. That's sort of the entire point, you take risks and you're always going to have people that dislike it. There's lots of money in the margins, and that's where we want to exist.
Anywho, I'm honestly surprised not more people hated it.
This is how a great number of infrastructure P3 projects are run. One professional engineer employed by a massive consulting firm signing off on the work of 50 low paid overseas designers. That one engineer will have 4 or 5 bosses and be responsible for as many huge infrastructure projects.
The leaders of these companies are well connected charismatic used car salesmen.
Not a copy writer, but wanted to highlight the shortcomings of traditional agencies. Also felt compelled to oversell what we do / who we are since I can't showcase most of my portfolio that's tied to existing agencies.
This isn't as new as it seems. Agencies (including "agencies of one") have been doing work on retainer for as long as there have been agencies.
The retainer model may be more common among legal firms than design agencies (largely because clients imagine their design needs are occasional or episodic rather than continuous), but it has absolutely been used for design.
How do these businesses afford employees then? Surely a normal employer-employee relationship is even more subscription-like than a freelancer on retainer.
The "subscription" model seems unlikely, as today companies do their work mostly "Just In Time" or in the industry lingo - Agile style. To a contractor this means the requirements when he goes into a project are not clean, so he can't reasonably price the project.
The hourly rate is in place so that in this relationship, work means more time for the consultant and more resources for the company wanting said work, this is the way it should be and keeps everyone on the same side.
If you mean, like others mentioned here, a model where a company pre-pays for some amount of hours this contractor promises to allocate for this company (at minimum) - this is called the "retainer model", this is fine and is a good idea for small tasks and not a big ongoing project
Time and materials billing does the opposite of keeping everyone on the same side --- most especially hourly, which is just about the worst way you can structure a contracting relationship.
My on this topic, ad nauseam, for over a decade on this forum:
Our projects ranged from 2-person 2-week web app assessments to multi-quarter assessments of entire operating systems, from individual projects to long-term staff augmentation, and everything in between. I'm confident that hourly rates do not in fact align your motivations with your clients.
I agree. The vast majority of contractors are burning through days like an FTE (I know of a guy who used to sleep, a lot...I just left him alone) for double FTE pay. My understanding is that this works because investors (walstreet and VC) cringe at employee headcount. Contractors do not fall under that count. There are other aspects such that GE can say they only laid off 50 employees in a press release...forgetting to mention the 4000 contractors they just sent packing.
I'm a broken record on this as well: a huge part of the value of a contractor is that you can retain them for the duration of your project, sever them, and bring them back whenever you need them. You don't get anything resembling that kind of flexibility from an FTE, and that flexibility has value, enormous value; high-end consultants charge dearly for it, and you should too. It's part of the expected value of the transaction.
Get unlimited requests and revisions, source files included, for $2,499/m.
Okay, you can say that, but how does a single person satisfy "unlimited" requests and revisions? Sounds like a recipe for rapid burnout and dissatisfied customers, to me.
> Yes! Once subscribed, you're able to add as many design requests to your queue as you'd like, and they will delivered one by one.
You can make as many requests as you want, but it doesn't seem like he makes any guarantee as to how fast he'll get to them.
> Because each and every request is different, it's hard to guarantee anything here but my general rule of thumb for a typical request is two business days.
His offer seems like those 19,99$ /month discount gyms that are open 24/7. you can access them all the time but have no guarantee to complete your workout in 1hr due to the large amount of people. Not sure if that works for deadline driven businesses.
Personally, I wouldn't frame things this way, but one way to manage that sustainably is to observe that you can offer limited requests without promising any particular response time.
As the number of requests increases, the latency of a response will go up. If a client needs a response in order to evaluate it for the next request, this will naturally lower the total number of requests. Also, clients will at some point realize they get where they want faster (i.e. overall throughput) if they are more parsimonious with their requests.
In practice, healthy relationships and good faith clients and agents are probably sufficient for this to work out.
I would not use the term "unlimited" but, depending upon the nature of the work, it can be perfectly reasonable to have a subscription without an explicit cap. When I was an industry analyst at a very small firm we worked on that basis (with adders for certain discrete projects--consulting days, posting rights for research, etc.). It was never a problem. Frankly, getting big companies to get their acts together enough to actually do inquiries and things like that so they got value from us was a bigger issue than them being a constant time suck.
The same way Verizon promises unlimited data. Most customers don't maximize usage and in the fine print there is probably some hard limit or exceptions for what they feel is abuse.
They can always rate limit by taking a day or two to respond to each email or revision request. That creates a limit of perhaps 20 interactions a month.
I'm building a company as a solo engineer right now, and I've been thinking a lot about growth in terms of firepower. I've decided to not anyone for a long time.
We aren’t an agency of one (but three) and have been doing this for many years. It’s been very helpful for both companies and ourselves. Let me explain:
We niched down to helping B2B software teams design better products (UI/UX). [1]
That focus helped us get really good at tackling design problems for these companies super effeciently.
Companies then benefit from just plugging us into their workflow and hit the ground running.
In the end, we as designers get to focus on what we love doing without the hassle of classical agencies (networking, endless prospecting). So less time is wasted doing things we hate.
And companies benefit from a more economic offering.
Why more economic?
Because we structure our business like a SaaS, our marketing is also structured like a SaaS. Clients find us, we don’t chase them.
The reason classic agencies are super expensive is because they spend many unpaid hours looking for projects. Then when they have one, the client gets charged a premium to cover for the previously unpaid hours.
A subscription model and treating the agency like a SaaS is more fair IMHO for both parties.
What if my medium enterprise needs 15 minutes of translate-this-to-french services every day, and hiring someone for 15 minutes per day isn't really a thing?
Differing industries are often experience these cyclical inversions at different rates. At the moment there has been a trend in industrial power away from single huge projects and more towards managed services models, and I suspect a lot of that is down to accountants finding fun new ways to capitalize the costs.
As someone who helped launched such a service, it's nice for me because the revenue is reliable, but I suspect both our services and contractor rates are much, much higher than what this is looking at.
It's possibly more in line with the "small art design" markets in which you can hire a graphic designer or musician or whatever out of the global south that is doing solid work for a fraction of what a more developed country agency would charge. Which is great for everyone except the existing freelancers in said developed countries.
Productized consulting works when you can turn your offering into something that is standardized and hence repeatable. This works for some consulting markets, but not all. If you're going to make websites for restaurants, you can do this. If you're going to make high performance back ends, probably not.
Uhuh. Except, we call that a retainer? It's not new at all?
Of course, this is better - there will be of course no sub-contracting. No siree, won't be seen. And nobody is ever going to slow-roll "unlimited". Or phone it in. Not at all. And of course there will be no client ever who would abuse an "unlimited" contract and have you work 120 hours a week.
Oh. Wait. Yes, there will, and it'll be just like it's now. There will be people you build a trust relationship with, and they'll get the juicier deals - because you trust them. They'll scale up, because they'll be asked more. And presto one-two-three you have an agency.
Yes, it's a slightly different billing model. And it's more conducive to a "stardom"/"free agent" approach, but that also means it will only work for people at the top of the game - who don't want to scale out and make more money that way.
Agencies (even of one) also get economies of scale that gyms don't. You have templates, pre-built components, domain specific knowledge of how to handle common problems, etc.
From what I've seen, it's pretty universal for contracts to individual freelancers like this to have an explicit "no subs" clause or at least require prior approval of specific subcontractors. I guess you could lie, or try to negotiate your way out of it in some cases... but I wouldn't count on that at scale.
Some, but not many will pay that for nothing. But many pay $2500/month for peace of mind.
I've had contracts like that renew for years with little work most months because a client just wanted to know I was incentivised to be available when they suddenly needed me.
I don't know how DesignJoy works. I can say that a common model in this circumstance is the person is a salesperson who outsources the rest of the operation to a network of subcontractors, including project management, AE, and fulfillment.
I dug a bit deeper. Looks like it's truly a "agency of one" in that he doesn't outsource his work. Rather, the customers are given access to a queue (that they can prioritize) where only one item in the queue is actively being worked on at a time.
Right. But you likely end up with most of these clients being pretty dormant and a few, or the new ones, being needy. If any given one is too needy then you cut them.
In practice many companies have a similar model they just dont say it. I mean technically as a dev I'm going to make as many revisions to my code as is requested and I get paid the same amount at the end of the month. My team just knows if its 500 revisions then there are probably some issues with the asks or my code.
Compared to a day rate contractor, $2499/mo is very little, so if you have bitty requests rather than a need for a full time staff member, your "unlimited" could easily be not very much, but still better than finding someone to do your on and off work.
This has been around for a while, but perhaps not packaged and marketed in this way. Probably quite effective when it comes to clients needing basic design needs. I don't see this working too well for actual building of software products, where it's not about the number of revisions that matter but more about spending time on the client + service provider relationship and building the right thing.
I read the article and can't tell if he thinks this is a problem or what? Usually when you have "storm coming" as he does in the title the implication is that it's bad. But reading the text and... I'm not really sure what the problem is and I'm not even sure that it's a new phenomenon. The article doesn't seem all that useful.
This is a weird take because in the agency world (agencies of many, if you will), the long-term trend has been in the complete opposite direction: a retainer model is increasingly being replaced by project-based and time-and-materials work.
I know several people who charge for an initial development fee and then offer recurring monthly packages which handle new development, updates, and maintenance on a retainer. They've been doing this for years. The best part about this scenario is that since the payment is already baked in, there's really no incentive for the "agency" to clamor for more unnecessary work. They are free to be advocates for what's best for the client since they will usually end up making more money by using the extra time to bring on yet another client than they would by servicing this existing client with more custom work.
This is a natural step in business growth: realizing that recurring revenue is recurring, and then productizing formerly bespoke work to benefit from economies of scale.
This is the business model I used before I got into high ticket work.
It's the lawyer business model, they pay you a retainer just to stay a client. Largely to ensure you are around when they do need you. This works well with software as moving companies is near impossible, you will have to retrain a whole new team.
It's hard to manage multiple clients and why I moved to high ticket stuff.
As a developer, I think the closest parallel or most common way people do this is to be "the web guy" for a few businesses: part-time, ongoing small development and maintenance. I've worked with many people like that through the course of my work. It seems like a chill life, but I don't know that I've seen anyone scale it to more than what the average freelancer gets.
My big pushback on this is not that it's hard to be an "agency of one" (it's easier than you think), but that it's hard to stay an "agency of one" --- the business model work this article talks overlaps almost perfectly with the work it takes to scale a consultancy to multiple people delivering.
I romanticize doing something like this, but my lack of experience in sales and lack of knowledge in general business dealings prevent me from going at it alone. I'd like a partner who complements my skill set. Reiterating another commenter's point, being on call 24/7 doesn't sound fun either.
I bought an EPO directly from the local integrated health system for a couple of years and it was a great experience. It was inexpensive and I never had an issue with my in-network claims. Although, I had care on the other side of the country once with it, and they looked at my insurance card like I was a space alien. It took them over a year to figure out what to do about that claim, but eventually they worked it out between themselves.
I would totally do it again -- it's about 1/2 the price of my current BCBS PPO for similar benefits. There's a lot more choice in healthcare when you're not part of a group plan that chooses your options for you.
Maybe in some states, but certainly not all. ACA health plans are quite easy to manage for an individual in my experience. I spent maybe an hour or two a year of paperwork on health insurance when I was consulting.
(Now that doesn't get rid of the nightmare you're likely to face if you have to _use_ the insurance for anything major... but that's just as true on an employer health plan, too.)
The worst part of the exchanges is the lack of access to PPO plans, at least here in Washington. HMO/EPO plans are trash if you live outside of major cities.
Actually no. No company wants to deal with 100's of different agencies with different terms, and it's unlikely that someone out there is doing 'revisions etc' i.e. actual work and making $1M, there's some pricing misinformation or someone is selling some kind of service. Certainly it's not a template.
Companies offering SaaS where there's very low friction - yes. But agencies like that, unlikely.
I'm already in this boat the last thing we want is every single person to be on different terms.
This is already a pretty popular concept on Fiverr, YouTube, and other content-based platforms. Basically the TL;DR is the agency is a "face" which is a personality, etc, and the operations are run by a whole team and outsourced for pennies on the dollar. It's smart.
As a contractor, I once had 9 ongoing projects for about 2 weeks, and that was an insane amount of work and context juggling. Handling 30 active clients for a year, let alone a career, seems impossible.
So either the clients aren't asking for much (which is most likely) or I'm missing something. I assume many bigger companies would happily replace a staff member, or a staff member's valuable time, with a ~30k/year contractor. Critically, these companies wouldn't feel the need to "get their money's worth" by keeping the guy busy every day. However, the smaller companies most freelancers see as their bread and butter are more cost sensitive, and will nickel and dime you as much as possible.
Are there enough big, monied companies to constitute a "storm", which I take to mean a shift in the business model for freelancers and boutique contractors? I dunno about that. I'd guess no, offhand.
Seems like DesignJoy has create a neat niche, which is awesome for him! I don't think it scales to the "disruption" level as this article implies.