I sold my social media agency for 8 figures. Here’s how I increased our sale price

Carrie Kerpen sold her social media agency in 2021 and now runs exit readiness advisory The Whisper Group. She interviews women who’ve exited on her podcast, The Exit Whisperer.

As an agency owner, if there’s one thing you should do to drastically increase the value of your company at acquisition, it’s this: move as many of your clients as possible to a retainer.

Any buyer will want to see predictable revenue, and they’ll pay more for an agency that delivers it.

Valuations are based in part on revenue, so the more revenue your agency brings in, the higher price you’ll be able to land when you sell.

Yet here’s the trick more agencies should employ: when it’s time to value your company, recurring revenue will be worth more than non-recurring revenue. It’s worth more because it’s predictable.

But recent trends show a shift from clients investing in retainer contracts to project work, making the predictability of agency revenue dicier than ever before. So how do you navigate a competitive climate where agencies are getting squeezed for margin — and convert your revenue to recurring versus project-based contracts?

Tips for making your agency’s revenue more predictable

When I sold Likeable Media for 8 figures in 2021, a social media agency I started with my husband, our recurring revenue was more than 80% of our overall income. That helped us command a higher multiple at sale.

People often ask how I did that, and the answer is — you guessed it — through retainers.

A retainer is a recurring contract that promises certain services each month or quarter, with a pre-determined price tag. It allows you to know how much revenue you have coming in and how much bandwidth your team will need to fulfill that promise. In the SaaS world, we call this monthly recurring revenue (MRR) or annual recurring revenue (ARR).

The predictability of this revenue is what makes it special. When you go to sell your startup, your company will likely command a higher multiple for recurring revenue than revenue that’s not predictable.

Here are a few tactics I used to grow my agency that will help you build a healthier business, so you can expect more at the closing table.

1. Move client projects to a retainer

Having built and sold a social media agency, I’ve run into a ton of influencer agencies through the years, especially as influencer marketing has been on the rise.

But in this growing space, time and time again I see folks solely pricing by project.

And that makes sense — to the client. But if you are truly an expert in something like influencer marketing, I would urge you to lean into that expertise. Talk about why you have something that others don’t. Then charge a low retainer for access to that expertise.

To suggest a retain to a new client, try saying this: “This is an exciting project and we’d love to work with you! To engage with us, we require a base retainer. This allows us to (insert the reason you are special here: your staff, your tool, your whatever!). We only take on a select group of clients, and this method allows us to truly dedicate time and thought to you in a way others might not be able to.”

The bottom line here is simply to own what makes you special, and charge a retainer for it.

Start low with your first few retainers, and then keep pricing new clients higher and higher until you get a “no” on price. Until you get a no from someone who should be in your budget range, you may not be priced high enough.

2. Apply entry-project revenue to a future retainer

One of the challenges of working with retainers is it’s not always possible to secure a retainer at the start of a client engagement.

Here’s a tactic that worked for me. A client would call up asking for social media help. I would start by earning their trust — by showing them why we’re great at what we do.

I would say that in today’s world, anyone and everyone says they “execute” social media. Yet we go beyond that.

I would present the option to purchase a “playbook”: a six-week project that was based on how to grow their social media channels. We’d show them what they need to do and how they need to do it, and I would charge a premium for that.

They could then take that playbook and execute it however they’d like — but if they chose to execute it with us, the value of the playbook investment was rolled into the recurring contract.

Suddenly, they are receiving a significant portion off of their recurring contract.

I love this method because it achieves a few things. First, it builds trust; I would even refer them to other agencies or freelancers as options for execution, showing that I truly want what’s best for them.

Second, it requires my team to put together a quality plan that would work, which means some of the hard work is already complete going into the partnership.

And third, assuming the plan was really strong, it was almost always a conversion tool to recurring revenue at a price that felt more valuable to the client. In other words, showing what we could do made the client willing to invest in our retainer work.

It’s also worth noting that if a client signed on initially to a retainer, I would incorporate the playbook, but waive the fee, incentivizing recurring revenue either way.

3. Think carefully about scopes and pricing

I once had a client who loved to negotiate. She would start with a giant number for a retainer, and we would throw in the sun, the moon and the stars to earn it.

Then she’d say, what if I took this out? What if I shaved this off? Can we reduce hours here? Suddenly, we were at half the recurring amount, and she was somehow getting the pricing benefit of a larger recurring contract, without investing larger recurring dollars.

Because we threw in all of that stuff up front, it made it harder to justify. Now, when I scope for a client, I do an itemized list of what things cost as if they were a project.

You want a photo shoot? Great. You want community management on social media? Awesome. I price each as if they are in isolation, which would make them much higher than if they were incorporated into a retainer that is more full service.

That’s the number I show to the client, along with a discount for being a retained client. If the itemized services get reduced, the discount becomes less significant.

If you carefully word and watch your scopes, and add a “Schedule B” or a rate card, you’ll be able to avoid unfavorable negotiations, offer steeper discounts for higher recurring revenue, and deliver a clear, transparent pricing methodology for your client.

By incorporating even one of these steps, you’ll not only increase your agency’s revenue, you’ll increase your recurring revenue — which will make your business that much more valuable to an acquirer.