6 min read
Most agencies can tell you what they billed last month. Far fewer can say what they will bill in three months. Paul Cash, founder, CEO and Chief Rooster of B2B marketing agency Rooster Punk, joined The Fractional CFO Show to explain why his agency is rethinking its pricing structure, and why the decision is as much about finance as it is about sales. His experience reflects a wider move among agencies from one-off project fees towards recurring revenue.
Why a Project-Based Pricing Structure Limits What You Can Plan
Rooster Punk is mainly project-based, like most agencies. Paul puts it plainly: “we only have a real visibility of maybe six to eight weeks in terms of pipeline.” One week the numbers look fine, and the next a client goes quiet or a project collapses.
He describes the last two years as the hardest he has seen in 25 to 30 years of running agencies, with many businesses eating into their reserves. A pricing structure built entirely on projects makes that pressure worse, because revenue has to be won again every month. ACC’s article on separating contracted income from pipeline income makes the same point from the forecasting side: a blended forecast can look reassuring right up until a deal slips but payroll stays the same.
Project, Retainer or Hybrid: Choosing a Pricing Structure
A project fee is priced against a defined scope. It suits one-off work, but income arrives only when a project is won and delivered. A retainer is a monthly fee for an agreed scope or amount of capacity. A hybrid pricing structure combines the two, with a retainer covering ongoing work and project fees for defined extras, so core costs are met before any new project lands.
The retainer end of that range is what produces recurring revenue for agencies. CFI describes recurring revenue as the most predictable income a business can have, because it is expected to stay consistent with a stable customer base, while service revenue tends to fluctuate with demand. A retainer only earns that description if the contract is real. A rolling agreement with short notice behaves more like repeat project work than a 12-month commitment does.
Why You Cannot Switch Every Client at Once
Paul is clear that shifting towards recurring revenue takes time: “we can’t just flick a switch and change our revenue model.” Rooster Punk is not asking existing clients to accept a different structure. Instead, the team is testing alternative fee and engagement structures in new business pitches, adding services that suit a retainer, and talking to partners who can bring them.
That protects existing relationships. Asking a live client to accept new fees risks existing revenue, while a new client has nothing to compare it with. The finance task is to decide what share of revenue you want contracted and track it monthly, so progress is measured rather than assumed.
Let the Service Decide the Pricing Structure
Paul links fees to what the agency sells. Rooster Punk’s work falls into two areas. Helping brands become more human, through brand projects, content and thought leadership, tends to stay project-based. Helping marketing leaders build a more systematic, AI-supported way of running marketing is longer, ongoing work that combines consultancy and technology, and that is where retainers, and recurring revenue, fit.
The point carries beyond marketing agencies. Work delivered continuously carries continuous cost, so it should be paid for continuously. Work with a clear start and end can stay a project. Paul is open that it is early days.
Protect Cash While You Test a New Pricing Structure
Paul is candid that not every move has worked. A push into the US used a strategy that burned through cash the agency could have kept for later. He still wants to grow that market, but with a different model. Adam raised the same risk on the show: testing too many changes at once can drain the runway needed to see any of them bed in.
ACC’s view is that any pricing change should start with a test budget, a review date and a clear measure of success, set before the first client sees it. Reserves should be sized to the worst-case gap, not the average month. Payment terms need the same attention. Our article on financial visibility flags payment terms on a new retainer as a cash gap to price for. Under UK late payment rules, if no payment date is agreed, payment is late 30 days after the invoice or the service, and agreed dates between businesses must usually fall within 60 days. Writing terms such as monthly billing in advance into the contract keeps cash flow control with the agency.
Why Revenue Quality Matters for Growth and Exit
Paul ties the shift to long-term value: “if we want to grow and if we want to exit one day, we have to get the quality of our revenue to a better place.” Buyers agree. ACC’s guide to business valuation for service businesses explains that recurring or retained revenue is worth considerably more to a buyer than project-based work, because it is predictable.
Bring a Commercial Eye to Your Pricing
Paul is frank that he is more passionate than commercial, and that reinventing the commercial engine of his agency with more of a financial eye has been harder than it needs to be. Rooster Punk also shares its figures with the whole team, which helps when results are good but may cause concern when they are not. Adam’s point on the show applies here: change needs urgency without alarm. Explaining why the change matters, and what it should achieve, keeps the conversation about direction rather than fear.
ACC’s CFO Perspective
A pricing structure is a finance decision as much as a commercial one. ACC’s guide to why pricing strategy determines profitability in growing agencies covers how cost-plus pricing and blended rates can erode margin performance as an agency scales. A clear pricing structure sets how far ahead an agency can see and when cash arrives. ACC’s view is that agencies should model a new structure before selling it, covering the contracted share of revenue, the payment terms and the cash needed to bridge the transition. A fractional CFO can build and track that model, so founders and leadership teams change what they charge with financial visibility rather than on instinct.
Recurring revenue does not arrive by renaming project fees as retainers. It comes from a pricing structure that matches the work, contract terms that hold and the cash discipline to get through the transition. If you’re keen to move your model more towards a recurring revenue basis, let’s chat.
Books Worth Your Time
Paul recommends four books, plus one of his own.
Good to Great by Jim Collins looks at what separates a good company from a great one.
Geoffrey Moore’s Inside the Tornado follows Crossing the Chasm and suits anyone in the technology sector.
Adam Morgan’s Eating the Big Fish is the one Paul loves most from a creative point of view, as a way to rethink how a brand comes to market, and its follow-up, The Pirate Inside, applies the idea to building a challenger culture.
Paul also points to his own book, Humanizing B2B, co-written with James Trezona.
Frequently Asked Questions
What is a pricing structure for an agency?
A pricing structure is the way an agency charges for its work: the fee model, such as project, retainer or hybrid, the scope each fee covers and the payment terms. It determines when cash arrives, how predictable revenue is and how much margin each client leaves behind.
Is a retainer the same as recurring revenue?
Not always. A retainer produces dependable recurring revenue only when it has a clear scope, a real contract term and notice period, and a price that covers delivery cost. A retainer that can be cancelled at short notice behaves more like repeat project work.
How long does it take to move an agency from projects to retainers?
There is no fixed timetable, because it depends on the services offered and the client base. Existing clients are hard to move, so most of the change tends to come through new business, which makes the shift gradual. Setting a target share of contracted revenue and tracking it monthly shows whether the change is working.
Why do buyers pay more for recurring revenue?
Recurring revenue is more predictable, which lowers the risk that future earnings differ from today’s. ACC’s guide to business valuation makes the point that recurring or retained revenue is worth considerably more to a buyer than project-based work for this reason.
This article is intended for general information and does not constitute legal, tax, or financial advice. Every business is different, and founders should take appropriate professional advice based on their specific circumstances.
Author
ACC Finance are a team of experienced fractional CFOs and management accountants who combine executive financial leadership with practical commercial judgement to work closely with founders and leadership teams to strengthen margins, improve cash flow, and guide critical financial decisions.
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