Submitted by Ignition (a BABA Summit sponsor)

 

If you’re running a creative or marketing agency in 2025, chances are you’ve already increased your rates or are seriously considering it. According to new data from Ignition’s 2025 Agency Pricing & Cash Flow Report, 97% of agencies plan to raise prices this year. But pricing is only part of the equation.Despite the uptick in rates, many agencies are still quietly leaking revenue. From unbilled work to late payments and inconsistent revenue streams, the most common financial issues agencies face are less about what they charge and more about how they operate.

Ignition’s report, based on a survey of over 270 U.S.-based agency leaders, illuminates where money is slipping through the cracks and what smart agencies are doing to stop it.

Scope Creep: The Hidden Drain on Profitability

Nearly 80% of agencies say they rarely or only sometimes charge for work that falls outside the original scope of a project. More than half estimate they’re losing between $1,000 and $5,000 each month. For 30% of agencies, those losses exceed $5,000 per month.

That’s not just a margin issue, it’s a growth problem.

Scope creep often begins innocently: a few extra revisions, an unplanned strategy call, a bonus round of creative. But over time, these extras add up. And when teams absorb them without compensation, they reinforce the idea that boundaries are flexible and service is unlimited.

How to Respond:

  • Clarify the scope up front. Every proposal should spell out what’s included, how many revisions are allowed, and what happens if the project grows.
  • Walk through the contract live. A live review helps ensure the client understands (and agrees with) the scope boundaries.
  • Build a change order habit. Normalize the idea that additional work requires additional agreement. This will protect your team and keep projects profitable.

Agencies treating scope discipline as a business necessity, not a client risk, are far better positioned to maintain margins and relationships.

Hourly Billing: Familiar, But Flawed

Despite the growing popularity of value-based pricing, nearly 30% of agencies still rely on hourly billing as their default model. It’s familiar and easy to explain, but it often undervalues strategic work and ties your income to your effort, not your impact.

By contrast, nearly an equal share of agencies are adopting subscription-style or productized services. This shift is particularly common among firms offering recurring services like content marketing, digital advertising, or web maintenance.

The benefits are clear: predictable revenue, better margins, and fewer disputes over how many hours were logged.

What to Consider:

  • Package your services. Take repeatable projects and bundle them into fixed-scope offerings.
  • Offer tiered options. Let clients choose between service levels (i.e., basic, premium)
  • Anchor pricing in value. Don’t just think in terms of deliverables. What outcome are you helping the client achieve?

It’s not about abandoning time tracking altogether. It’s about aligning what you charge with the value you deliver.

Late Payments Are a Structural Problem

According to the report, 97% of agencies deal with late client payments. 71% say at least one in four invoices is overdue, and 56% say clients typically pay two to eight weeks after the invoice due date.

When agencies operate on thin margins or rely heavily on one-time projects, that delay isn’t just inconvenient, it’s risky.
The issue isn’t just client behavior. Many agencies still rely on manual invoicing, follow-up emails, and a “we’ll send it when we remember” approach to collections. Only 16% ask for full payment up front, and only a fraction use automated billing platforms that collect payment details in advance.

What Works:

  • Get paid before the work starts. Even a partial deposit helps filter serious clients and stabilize cash flow.
  • Automate follow-ups. Systems that send reminders or auto-debit accounts eliminate most of the awkwardness of chasing money.
  • Enforce consequences. If your contract includes late fees, apply them. Respect for your process starts with you.

Waiting 30 to 60 days to get paid is the equivalent of giving clients an interest-free loan. That’s money you could be using to pay staff, invest in tools, or fund growth.

Chasing Consistency in Revenue

Beyond scope creep and late payments, the broader problem many agencies face is inconsistency. According to the report, only 8% of agencies say their monthly revenue is highly predictable. Most are operating in a cycle of feast and famine.

This volatility makes it difficult to plan, hire, or invest. And while retainers and recurring work aren’t the right fit for every agency, most firms have at least one service they could package that way.

Ideas to Explore:

  • Add a follow-on plan. After a project wraps, offer a monthly support, content, or optimization package.
  • Start small. You don’t need to convert all clients to retainers. Even a handful of recurring contracts can add financial stability.
  • Forecast regularly. Build a rolling three- to six-month projection that accounts for active proposals, likely renewals, and payment timelines.

Agencies with even modest recurring revenue report more confidence in hiring, investing, and scaling.

Strong Operations = Strong Margins

The need for operational structure is what ties all these issues together—pricing, scope, billing, and cash flow. The most resilient agencies aren’t just good at client work but also at running a business.

That doesn’t mean building a bureaucratic machine. It means implementing repeatable systems so your team doesn’t have to reinvent the wheel with every new project.

Try This:

  • Audit your proposal templates. Are the scope boundaries clear? Do they include payment terms and renewal clauses?
  • Create a billing playbook. Standardize how and when you invoice, follow up, and escalate.
  • Schedule routine check-ins. Make pricing reviews and client renewals a recurring part of your quarterly planning.

These are the unglamorous habits that quietly protect your revenue.

A Wake-Up Call Worth Heeding

The findings from Ignition’s 2025 Agency Pricing & Cash Flow Report serve as a timely reminder. Agencies aren’t just losing money from poor pricing—they’re leaking it through inconsistent practices, outdated billing models, and a reluctance to enforce boundaries.

But none of this is inevitable.

Better systems are within reach, whether you’re a two-person shop or a 50-person firm. And the payoff isn’t just profitability. It’s peace of mind. It’s clarity about what’s coming next, and it’s the ability to focus on creative work without constantly worrying about whether the invoices will clear.

Want to benchmark your own agency? Read the full report at ignitionapp.com/2025-agency-pricing-cashflow-report.