5 Reasons Why Agencies Should Own Their Software (Not Rent It)
If you're running an agency, you're likely using (and paying for) multiple SaaS tools. But what if you could own the platform instead of renting it? Here's why that's a game-changer.
1. Recurring Revenue vs. Project-Based Income
The Power of MRR
Instead of constantly hunting for new clients and projects, SaaS gives you predictable, recurring monthly revenue. One client paying $200/month is worth $2,400/year—and they stay subscribed for years, not weeks.
Real Example:
A marketing agency charging $5,000 per project needs 10 projects/month to make $50K. The same agency with a $200/month SaaS product needs just 250 customers—who stay for an average of 24 months.
2. Higher Business Valuation
Service businesses typically sell for 1-3x annual revenue. SaaS companies? They sell for 5-10x annual revenue—sometimes even higher.
Agency Model
Annual Revenue: $500K
Valuation Multiple: 2x
Exit Value: $1M
SaaS Model
Annual Revenue: $500K
Valuation Multiple: 7x
Exit Value: $3.5M
3. Scale Without Hiring
Traditional agencies hit a wall: to grow revenue, you need to hire more people. More people means more overhead, management complexity, and shrinking margins.
SaaS breaks this model. You can serve 10 customers or 10,000 customers with essentially the same infrastructure. Your margins actually improve as you scale.
4. You Own the Customer Relationship
When you use third-party SaaS tools, you're at their mercy. They can:
- •Raise prices at any time
- •Change features or remove functionality
- •Shut down entirely
- •Access and control your customer data
When you own the platform, you control everything. Your customers, your data, your pricing, your roadmap. Total freedom.
5. Leverage Your Existing Expertise
You already understand your client's problems better than anyone. You've been solving them manually for years. Why not package that expertise into software?
Real Success Story
A legal consultancy spent years creating custom documents for law firms. They realized they were solving the same problems repeatedly. So they built a SaaS tool that automated document creation.
Result: $32K MRR in 4 months, with 30 law firms as paying customers—many of whom were previous clients.
The Transition Strategy
You don't have to abandon your agency overnight. Here's the smart way to transition:
- 1.Identify the problem: What do you solve repeatedly for clients?
- 2.Launch your SaaS: Use a white-label platform to get to market fast
- 3.Offer to existing clients first: They already trust you
- 4.Gradually shift focus: As SaaS revenue grows, reduce service work
- 5.Reinvest profits: Use SaaS revenue to improve the product
The Bottom Line
Owning your software isn't just about saving on monthly subscriptions. It's about: