One of the common questions I hear from digital agency owners is: “Are we spending too much on subscriptions?”
Recently, a client noticed that 8-10% of their gross revenue was going toward tools like ClickUp, Calendly, and ChatGPT. Naturally, they wanted to know if spending on agency subscriptions was too high and what an ideal benchmark might look like.
The short answer? Most agencies aim to keep spending around 5% of gross revenue on tools and subscriptions.
But if you’re running a remote agency with no rent or traditional office costs, it’s normal for that number to inch higher without setting off any alarms.
So, if your subscription spending falls in the 8-10% range, you’re probably not far off track. But let’s break down those numbers a bit more.
How Do Your Numbers Stack Up?
If I’m scribbling numbers on the back of a napkin, here’s how I would think about your overall budget:
- 50% for payroll
- 20% for profit
- 30% for operating expenses: This is where subscriptions, marketing, rent, and other essential costs come in.
These are ballpark figures, of course, and can change a bit depending on your specific setup.
Within that 30% operating expense chunk, it’s all about prioritizing where your money goes. Some common benchmarks to aim for:
- 5-10% for marketing
- 5% for subscriptions
- 5-10% for rent
- 2-5% for accounting
If you’re combining rent (or no rent) and subscriptions and hitting around 10%, you’re in a healthy spot.
The Reality of Remote Work & AI Tools
Running a remote agency brings its own financial quirks. Without office expenses, it makes sense for your subscription costs to tick up. After all, digital tools are your virtual office.
Plus, let’s be honest—AI tools have exploded onto the scene, and we’re all testing out which ones actually make a difference in our workflows.
This is part experimentation, part investment.
But while it’s great to play around with the new shiny apps, keeping track of your tech stack’s efficiency is key.
Are these tools making a real impact, or are they just adding to your budget without delivering enough value?
Ask Yourself: Can You Simplify?
With that in mind, it’s wise to take a closer look at your spending from time to time. If you can trim down that number, it means more money back in your pocket.
So, before you settle for your current subscription costs, do a quick audit to identify any overlaps. You might be surprised at how many platforms cover similar functions:
- Calendly vs. Google Appointment: Both handle scheduling like pros.
- Zoom vs. Google Meet: Do you really need both video conferencing tools?
- Loom vs. ClickUp clips: Which one fits your team’s style better?
- Slack vs. ClickUp chat: Could consolidating cut some costs?
That said, it’s not always worth the “lift” of switching platforms unless the savings are significant or your team is starting to feel app fatigue.
The key is to make those changes only when it truly makes sense.
My Final Thoughts
Try to keep your subscription spending around 5% of your revenue, but don’t panic if it edges closer to 10%. That’s not always a bad thing.
The key is finding the right balance. Invest in tools that genuinely help your team work better, but don’t be afraid to cut out the extras if you notice overlap.
And remember, if being a remote agency means spending a bit more on digital tools, that’s perfectly fine—just make sure those tools are pulling their weight.
Catch you next time!
