2021 Digital Services Outlook

by Mar 16, 2021Research & Findings

Summary & Key Findings

Digital shops wrapped up a tumultuous 2020 with solid revenue growth and margins. Average revenue growth of 10% Y/Y was led by Small and, surprisingly, Large shops where expanding project sizes provided strong tailwinds. Revenue per employee was up in 2020 vs. 2019 which indicates shops were financially healthier than many expected. We saw specialist shops (primarily specializing along verticals / industries rather than technologies / services) grow significantly faster than generalists providing another argument for specialization. This year’s survey also gave us new insight into the average composition of firms at different sizes which showed the growth of the importance of sales people as firm size increased. Pricing methods remained essentially unchanged from last year with the big three (Time and Materials, Fixed Bid, and Retainer) making up the majority of responses. New data from Summit CPA shed some light into the makeup of average overhead components and utilization rates. Average utilization rates for the year are a reflection of just how challenging 2020 was.

The big story here is how optimistic owners are for a strong 2021. From their average overall outlook through their revenue growth, client budget, and hiring expectations, digital shop owners are expecting a bright 2021.

Demographic charts

Download The Full 22-Page Report

You’ll Learn

Average revenue growth rates by shop size in 2020

How project size changes correlated with growth rates.

If being a specialist shop had any impact on profitability or growth and how much.

The most common pricing methods digital shops employ.

Average profit margins by company size in 2020. 

About This Report

  • 102 Responses
  • Average size: 30 employees
  • Median size: 16 employees
  • Average age: 14 yrs old

This survey was open to the Bureau of Digital and Promethean Research communities during February 2021. It focused specifically on the outlook of digital shop owners and managers. Both the size distribution and age distribution of respondents fit with our view of how the overall digital services market is distributed.

52% of the shops identified as specialists which is up from 47% last year and 30% in 2018.

The average number of services offered remained unchanged from 2019 at 5. The most common services offered by shops in this survey were: Web design / development, UX design / strategy, Digital strategy, Mobile design / development, and App design / development.

Get Instant Access Now


Get the latest research, insights, tools, and resources that make managing a digital agency easier, delivered straight to your inbox.

Related Articles

The Factory – Consultancy Continuum

This post originally appeared in our newsletter on September 13th, 2022. Sign up to get our latest research, insights, tools, and resources delivered straight to your inbox twice a month. Factory-Consultancy Evaluation Complexity 2.0: The Factory – Consultancy...

Agency Roles, Goals & Structure

Getting the right people in the right seats allows owners and partners to focus their energy on more strategic questions vs. putting out that day’s fire. That additional strategic bandwidth can make all the difference when the market gets choppy.

Financial Metrics for Marketing Agencies

Monitoring the right metrics can make growing a digital agency significantly easier. By regularly monitoring them, and asking the right questions, they can reveal where you should focus your team.

How to Promote a Digital Marketing Agency

Like the cobbler’s children with no shoes or the photographer without family pictures, it’s easy for digital agency owners to overlook their own promotion. Agency owners are experts at elevating their customers’ brands, products, and services and designing growth...

How to Master Qualifying Customers

Customer lead qualification is the process companies follow to predict whether captured leads are interested in their services. Qualifying customers through a well-honed points system can improve lead quality, save resources, and glean better clients.  Before You...

How to Tell a Client Something is Out of Scope

Scope creep is a challenge for many digital agencies. It can quietly kill profit margins, lower morale, and create tension between you and your clients. But if you know how to tell a client something is out of scope, you can turn these situations into...

Creating Your Agency Roadmap

Some people make trip planning seem like an art form. Once they determine their destination, they plot the best route, make “must-do” lists, and assign tasks to fellow travelers. But any master planner will tell you there’s a method to their whirlwind of activity....

Key Digital Agency Tools

Workforce surveys often ask, “Do you have the right tools to do your job?” You can find an almost endless list of digital agency tools to increase efficiency and improve your offerings. Here’s a look at why tools are necessary and some of the top-rated, most prolific...

The Future of Running a Digital Agency

The adage, “The more things change, the more they stay the same,” typically withstands the test of time. Fashion and design trends recycle. Generations display similar developmental patterns. It’s like many facets of life are on repeat. But if you own a digital...

Understanding Monthly Recurring Revenue

Most business owners continually search for strategies they can bank on — figuratively and literally. Whether your digital agency is just starting out or has hit its growth sweet spot, monthly recurring revenue is likely an integral part of your operational and growth...
Share This