The Hidden Cost of Low Utilization, With Carson Pierce

Points of Interest1:08 – 1:44 – Defining Retainers: Marcel and Carson introduce the topic of retainers, noting how different agencies define them in varied ways.2:05 – 2:37 – Core Benefit of Retainers: Carson explains that retainers create recurring revenue and provide clients with consistent access to agency resources.2:50 – 3:33 – Historical Context: Marcel traces retainers back to traditional professional services, where upfront payments secured future capacity.3:44 – 5:19 – Modern Variations: The conversation highlights how retainers have evolved into many models, including time-and-materials, flat fees, and performance-based pricing.5:32 – 7:04 – Pitfalls of Prepaid Hours: Carson critiques “bucket of hours” retainers, emphasizing their lack of control and operational strain.7:10 – 9:29 – Accrual Accounting Risks: Marcel outlines how prepaid hours create deferred revenue liabilities that are often untracked, leading to serious cash flow problems.11:05 – 11:41 – Operational Consequences: Carson notes that unexpected claims on rollover hours can overwhelm teams, forcing agencies into overwork or costly freelancer hires.12:04 – 14:33 – Pricing Model Quadrant: Marcel introduces the value–risk quadrant, showing how agencies should align retainer structures with engagement value and project risk.15:07 – 16:31 – Abstracted T&M Models: For high-value, high-risk work, Marcel explains why abstracting hours into larger time blocks or cross-functional teams improves leverage and profitability.17:00 – 18:21 – Low-Risk Models: The hosts outline flat retainers tied to deliverables and performance-based pricing tied to client outcomes, noting challenges with attribution.19:00 – 20:27 – Pricing Dynamics: Carson and Marcel discuss how flexibility and overages influence rates, with retainers often discounted for predictability but charged higher when clients exceed agreed capacity.37:06 – 38:14 – Account Management Posture: Marcel contrasts T&M models, where account managers say “yes and” to client requests, with fixed-scope retainers, where the posture shifts to “yes but” requiring tradeoffs or renegotiation.Show NotesConnect with Carson via LinkedIn4 Agency Pricing Models: Which One is Right for You?Maximizing Project Profit Margin: A Guide to Increasing ReturnsFree Agency ToolkitParakeeto Foundations CourseFree access to our Model PlatformLove the PodcastLeave us a review here.

Points of Interest00:00 – 01:09 – Introduction: Marcel introduces guest Matt, founder of The Creative Life and bestselling author, highlighting his mission to help creatives design businesses that align with their lifestyles.01:14 – 02:24 – Coaching High-Level Creatives: Matt explains his role as a coach for award-winning creatives seeking fulfillment beyond the hustle, sharing examples of clients from Disney, Spotify, and the music industry.02:39 – 05:00 – Early Career and First Business: Matt recounts his start in advertising agencies, the launch of his own creative business, and his pursuit of a digital nomad lifestyle inspired by The 4-Hour Workweek.05:00 – 07:28 – Incongruence of Success and Fulfillment: While achieving his dream of running a remote business, Matt realized his work lacked meaning and fulfillment, sparking a personal crisis after the sudden loss of a family friend.07:57 – 10:46 – Discovering Core Values: Through coaching, Matt identified that fulfillment comes from emotional states like freedom, impact, and significance, which guided his transition into life coaching for creatives.12:02 – 15:47 – Three Core Challenges for Creatives: Matt outlines the main struggles creatives face: lack of differentiation, poor communication of value, and inability to scale delivery beyond the founder.18:03 – 20:56 – Differentiation Through Unique Experience: Matt introduces the idea of standing on a “mountain of value,” emphasizing that personal stories and experiences create unique positioning for creative businesses.21:38 – 24:00 – The Four P’s of Positioning: Matt shares his framework for differentiation—Person, Problem, Promise, and Process—illustrated with a case study of a former Spotify designer who grew by niching into music tech branding.26:26 – 28:22 – Communicating Value Through Symptoms: Matt explains why creatives must focus on client symptoms rather than their own services to attract higher-quality clients earlier in the buying journey.30:28 – 34:52 – Shifting the Sales Approach: Marcel and Matt discuss how education and thought leadership build trust, while Matt emphasizes the importance of mastering sales conversations to accelerate client acquisition.35:32 – 37:20 – Building Scalable Delivery Systems: Matt describes how to design repeatable processes that move clients from current challenges to desired outcomes, enabling agency founders to step back from daily delivery.39:38 – 42:26 – Final Advice and Resources: Matt promotes his upcoming book The Creative Studio Roadmap and diagnostic tool and encourages creatives to intentionally design businesses that bring freedom, fulfillment, and financial security.Show NotesConnect with Matt via:LinkedInWebsiteMatt’s One Page Sales FrameworkCreative Courage Podcast: 3 Strategies To Skyrocket Your Agency’s Profit with Marcel PetitpasNew Book Tool: Quiz ToolLove the PodcastLeave us a review here.

Points of Interest00:01 – 00:51 – Introduction: Marcel welcomes Carson Pierce back to the show and introduces the episode’s focus on utilization, specifically the hidden costs of low utilization in agencies.01:18 – 01:50 – Why Utilization Matters Now: Marcel notes that many agencies are struggling with overstaffing and underutilization in a difficult market, which compounds hidden costs over time.01:50 – 02:45 – Carson’s Perspective on Utilization: Carson explains that agency owners often see only the surface-level financial impact of low utilization, but miss the deeper, unexpected effects it creates.02:45 – 03:26 – Everyday Utilization Analogies: Carson shares real-world examples, like an unused Jeep and moving trucks, to illustrate how underutilized assets quietly drain resources.03:39 – 05:59 – Defining Utilization Clearly: Marcel defines utilization as the percentage of purchased team capacity actually used for revenue-generating client work, clarifying common misconceptions and variations.07:25 – 09:25 – Over-Servicing as a Hidden Cost: Carson highlights how idle team members often fill time by overservicing clients, which distorts expectations, undermines project profitability, and becomes habitual.09:25 – 11:00 – Internal Projects and Incentives: Marcel explains that low utilization often shifts time into internal projects, which can be productive but frequently become unfocused or misaligned with priorities.11:00 – 13:47 – Lost Efficiency Without Pressure: Carson argues that high utilization forces efficiency improvements, whereas low utilization removes urgency, leading to stagnant processes and missed bottleneck discovery.15:55 – 17:46 – Disengagement and Cultural Risks: Carson warns that underutilized employees may feel unproductive, disengage, or eventually leave, while survivors of downsizing can resist returning to higher workload levels.20:08 – 21:34 – Opportunity Cost of Low Utilization: Marcel expands on the long-term financial risks, including reduced profitability, lower enterprise value, depleted cash reserves, and a shift to defensive decision-making.25:23 – 27:35 – Managing Unutilized Time Wisely: Carson advises agencies to be deliberate with excess capacity, setting clear expectations for client over-servicing or internal projects and preparing for busy periods.29:21 – 34:21 – Modeling and Leadership Lessons: Marcel and Carson stress the importance of building a business model to set realistic utilization targets, and Marcel shares candid lessons from Parakeeto’s restructuring journey.Show NotesDeep dive on UtilizationUtilization CalculatorBook: The GoalLove the PodcastLeave us a review here.

Points of Interest1:10 – 2:03 – Introduction: Marcel welcomes Mike Grinberg, founder of Proofpoint Marketing, who specializes in helping boutique firms strengthen positioning to compete against large incumbents.2:15 – 3:54 – Competing with “IBM”: Mike explains his role as helping boutique firms reduce client risk perception so they can win against well-known, safer-seeming competitors.4:48 – 5:40 – The Safe Choice Problem: Agencies that differentiate too much without context risk being seen as confusing or risky, which often drives clients back to incumbents.5:46 – 8:44 – Positioning Overlooked Through Risk: Traditional positioning frameworks focus on being better or different but rarely consider how buyers perceive risk in making a nontraditional choice.10:08 – 12:52 – Why Positioning Matters More Now: In uncertain markets, poor positioning is exposed. Firms that only grew with the tide find themselves struggling when growth slows.13:10 – 14:16 – Positioning as an Operational Issue: Positioning cannot be treated as surface-level messaging; it must be reflected in delivery, hiring, onboarding, and overall business design.15:13 – 17:29 – Three Levels of Differentiation: Mike outlines functional, intellectual property (frameworks, tools, methodologies), and promotional differentiation as the three vectors agencies must align.19:00 – 20:13 – The Category Dilemma: Agencies often struggle between fitting into known categories, which brings competition, or creating new ones, which increases client risk and education costs.22:23 – 24:03 – Functional vs. IP Positioning: Mike advocates anchoring to existing categories functionally while differentiating through intellectual property and go-to-market messaging.26:30 – 27:49 – Starting with Ideal Client Profile (ICP): Effective positioning begins with deeply defining the ICP beyond titles and industries, including attributes like stage, structure, and challenges.30:26 – 36:23 – The Risk Perception Matrix: Mike introduces his framework with two axes—personal vs. organizational risk and internal skepticism vs. external questioning—to explain how agencies can derisk buying decisions at every stage.Show NotesConnect with Mike via LinkedInNewsletter: Proofpoint.marketingRisk Perception MatrixLove the PodcastLeave us a review here.

Points of Interest0:00 – 0:17 – Opening: Marcel reflects on building production-level software using low-code tools without prior coding experience, setting the stage for a discussion on rapid change in the agency landscape.1:01 – 3:40 – Conference Context & Audience: Marcel shares his experience at Web Summer Camp in Opatija, Croatia, hosted by Netgen, describing its highly technical European attendee base and collaborative environment.5:03 – 7:18 – European Agency Realities: The conversation explores regulated salaries, generous benefits, and extended vacation policies in markets like North Macedonia, and how these shape agency cost structures compared to North America.7:18 – 11:16 – Local vs. Export Markets: Many Eastern European agencies balance serving lower-rate local clients with the opportunity and challenges of selling into higher-priced North American and UK markets.11:16 – 14:22 – Trust and Positioning Across Borders: Marcel emphasizes that weak positioning, not geography, is often the real barrier to winning high-value international work and urges agencies to invest in thought leadership.16:19 – 18:20 – AI as a Global Equalizer: They discuss how AI is redefining “geo-arbitrage” by giving agencies worldwide access to powerful, low-cost capabilities, eroding traditional labor-cost advantages.19:09 – 21:05 – Universal Agency Benchmarks: Marcel notes that delivery margin targets above 50% and overhead at 20–30% apply globally, though currency differences can magnify software cost burdens in some regions.22:24 – 25:26 – Retaining Talent in a Global Market: Agencies face competition from multinational firms and startups for top talent, leading many to adopt flexible, growth-oriented cultures to keep their teams engaged.26:29 – 28:19 – Collaboration as Competitive Advantage: The cooperative nature of the agency community, in both Europe and North America, is positioned as key to navigating future M&A activity and industry shifts.29:17 – 31:35 – The Power of Networking: Marcel highlights the role of trusted peer relationships in unlocking referrals, partnerships, and acquisition opportunities during both strong and challenging economic cycles.32:05 – 36:18 – Positioning for the North American Market: Competing solely on technical capability is becoming harder; agencies must lean into operational excellence or deep specialization to sustain premium pricing.37:00 – 40:19 – Final Take on Adaptability: Marcel closes by underscoring the importance of solving specific, high-value problems better than anyone else, with specialization and clarity as enduring competitive levers.Show NotesConnect with Carson via LinkedInFree Agency ToolkitParakeeto Foundations CourseFree access to our Model PlatformLove the PodcastLeave us a review here.

Points of Interest0:00 – 1:25 – Guest Introduction: Marcel welcomes James Friel, serial entrepreneur, investor, and leadership expert, to discuss building scalable, profitable businesses through effective operations and leadership.1:26 – 3:08 – Journey from Corporate to Entrepreneurship: James shares his transition from aerospace and software engineering into consulting, entrepreneurship, and acquiring businesses, driven by a curiosity for how businesses function.3:09 – 4:48 – Building a Sellable Business: James outlines his core focus—helping founders create businesses that generate cash flow and are structured for potential exit through strong infrastructure and operational clarity.5:00 – 6:46 – The First Principle: Customer-Perceived Value: A business is only viable if customers see genuine value in its offerings. Founders often overvalue their own ideas and under-prioritize market fit.6:47 – 10:14 – Value Creep and Feature Fatigue: James critiques how companies add features that customers don’t value, creating bloat and eroding customer loyalty—highlighting the need for focus and feedback.10:15 – 11:24 – People and Culture as Core Assets: A business with enterprise value depends on its people. Leadership, culture, and alignment are foundational to building an organization that can thrive without the founder.11:25 – 13:56 – James’ Leadership Struggles and Realizations: James recounts his early leadership challenges and how they motivated his deep dive into team performance, management systems, and organizational design.15:00 – 16:15 – The Three Core Failures: Most performance issues stem from lack of leadership, accountability, and clarity. Fixing these creates the foundation for sustainable team success.16:16 – 21:24 – Why Leadership Is a Profit Lever: Leadership is essential for ROI on your largest expense—people. Poor leadership silently burns cash and stalls growth, despite having the right strategy or data.23:37 – 26:17 – Willingness vs. Ability Matrix: James introduces a simple performance framework that helps leaders assess team members based on their alignment (willingness) and skills (ability).33:01 – 37:52 – Role-Based Scorecards: James breaks down his approach to team structure using one-page scorecards for each role—clarifying objectives, tasks, metrics, and reporting expectations.38:00 – 40:17 – Introducing the “57 Hats” Product: James shares his new gamified tool that helps founders identify and delegate responsibilities, creating clarity on team structure and freeing them to focus on growth.Show NotesConnect with James:LinkedInWebsiteGame: 57 Hats

Points of Interest0:00 – 0:13 – Introduction: Marcel Petitpas introduces the importance of pricing in agency profitability, emphasizing that even great delivery and project management can’t compensate for poor pricing strategy.1:00 – 1:39 – The Problem with Pricing Guesswork: Kristen Kelly explains that most agencies lack a formal pricing framework, often relying on gut feelings, competitor comparisons, or outdated rate cards.2:09 – 3:49 – “Vibe-Based” Pricing Explained: Marcel highlights how pricing decisions are frequently made without math or structure, leading to unclear expectations and poor profit outcomes.4:00 – 5:35 – Budget-First Pricing Pitfalls: Agencies that accept client budgets without recalibrating scope or checking for margin risk setting themselves up for failure from the outset.6:27 – 7:46 – Undercharging and Overdelivering: Many agencies underestimate the margin needed for true profitability, aiming too low and failing to account for overhead, unutilized time, and business costs.9:00 – 10:33 – Scope Creep and the $0 Change Order: Kristen and Marcel discuss strategies for managing out-of-scope requests, including the effective use of $0 change orders to maintain boundaries.11:43 – 14:20 – The Right Way to Factor in Overhead: Marcel breaks down how to incorporate overhead and indirect costs into pricing without overly complex calculations or flawed net profit heuristics.16:15 – 19:49 – Choosing the Right Pricing Model: Using the Agency Pricing Quadrant, the episode explores how risk and value should guide pricing models—ranging from hourly to value-based strategies.19:53 – 22:34 – Tracking Average Billable Rate (ABR): A simple but powerful metric, ABR helps agencies estimate delivery margin and benchmark performance across services and projects.22:56 – 25:09 – Overcoming Fear of Raising Prices: Kristen and Marcel debunk fears around increasing prices, offering strategies for timing and managing legacy client transitions.25:21 – 26:54 – Delivery Margin as a North Star: The key takeaway: aim for a 70% delivery margin when pricing services to ensure room for overhead, profit, and sustainable operations.Show NotesConnect with Kristen via LinkedInFree Agency ToolkitParakeeto Foundations CourseFree access to our Model PlatformPricing CalculatorPricing & Scoping EpisodePricing Model Quadrant

Points of Interest0:00 – 1:05 – Introduction: Marcel introduces Stephen Neville, CEO of BugHerd, highlighting his background in agency work and his transition into running a SaaS company that helps agencies streamline QA and client feedback.2:24 – 3:10 – The Dream of SaaS: Marcel and Stephen discuss the allure many agency owners feel toward building a product, inspired by success stories like 37signals—often without fully grasping the implications.5:30 – 7:10 – Major Model Differences: Stephen outlines key contrasts between service and product businesses, including delayed ROI in SaaS, the shift from clients to customers, and the challenge of proving value before seeing returns.8:02 – 9:09 – Saying No at Scale: Product businesses require frequent, disciplined “no’s” to user feedback—unlike services, where agencies are more likely to say yes. This shift is critical to managing scope and long-term product health.10:14 – 11:02 – Why Agencies Want to Pivot: Common motives include stabilizing revenue, creating proof of expertise, and giving teams opportunities for skill development—though not all transitions are strategically sound.13:19 – 14:04 – Common SaaS Misconceptions: Marcel highlights flawed assumptions—such as SaaS needing less human capital or being less client-facing—debunking the idea that software removes the need for people.16:20 – 17:01 – SaaS Risk Profile: The risk and financial exposure of building SaaS is often underestimated, with founders needing to endure potentially years of losses before seeing profitability.21:15 – 22:53 – Lessons to Apply in Services: Stephen emphasizes adopting the SaaS discipline of qualifying and deflecting misaligned client requests, to protect team capacity and maintain healthy utilization.24:01 – 24:59 – Productization Without Code: Agencies can create repeatable, value-rich offerings by productizing existing services—without building software—through structured, process-driven deliverables.28:29 – 30:20 – The Real MVP Framework: Marcel shares his “Three Ps” framework—Problem, Point of View, and Process—as the true foundation for product development, arguing services are the best way to validate solutions.33:01 – 34:46 – Services as a SaaS Growth Lever: Stephen explains how services improve acquisition, onboarding, and retention—especially for enterprise clients—making them a strategic tool, not a liability.35:46 – 37:25 – Monetizing Services in SaaS: The conversation closes on the growing trend of SaaS companies charging for implementation and support, reframing these formerly free functions as value-rich offerings worth paying for.Show NotesConnect with Stephen via LinkedInWebsite – Bugherd.com

Points of Interest0:00 – 1:20 – Guest Introduction: Marcel introduces Kristen Kelly and sets the stage for a deep dive into the roles of fractional COOs versus building operational intelligence within growing agencies.1:21 – 2:25 – The $1M Growth Threshold: Kristen explains how agencies crossing the $1M mark often face operational strain and confusion about whether to hire help or improve their systems.2:26 – 5:05 – Defining a Fractional COO: Marcel outlines what a fractional COO typically does—bridging strategy and execution—and highlights the lack of standardization across ops roles in agencies.5:06 – 7:59 – Scope Differences by Agency Size: The team discusses how the expectations and responsibilities of a COO differ dramatically between a 20-person and 200-person agency.8:00 – 10:16 – Operational Intelligence vs. Role Ownership: Marcel explains why data and modeling are essential for prioritizing and sequencing initiatives—work that can't fall solely on a fractional COO.10:17 – 13:03 – Metrics Frameworks as a Foundation: The conversation shifts to the importance of shared definitions for key metrics (like utilization and gross margin) to avoid costly misalignment.13:04 – 16:51 – The Risks of Poor Data: They explore the consequences of relying on messy or inconsistent project and financial data—including delayed decisions, accuracy issues, and limited insight.16:52 – 20:21 – When to Hire vs. When to Model: Marcel outlines when it makes sense to bring in a fractional COO versus starting with operational intelligence, depending on strategic versus tactical needs.20:22 – 22:25 – How Parakeeto Supports Agencies: The hosts explain how Parakeeto provides not just reporting tools but also the advisory layer to help agencies convert intelligence into action.22:26 – 24:42 – Bringing Operational Alignment: Kristen emphasizes how Parakeeto helps unify internal teams around a shared understanding of the business model and key profitability levers.24:43 – 27:32 – The Scope of Operational Intelligence: Marcel breaks down the full picture of operational intelligence, from framework creation to data integration, reporting, and cadence-building.27:33 – 34:15 – Final Advice & Avoiding Costly Mistakes: Marcel and Kristen caution against relying on underqualified ops hires to build complex systems, advocating instead for investing in clarity and frameworks first.Show NotesConnect with Kristen via LinkedInFree Agency ToolkitParakeeto Foundations CourseFree access to our Model PlatformLove this PodcastLeave us a review here.

Points of Interest0:31 – 1:09 – Welcome & Guest Intro: Marcel introduces Michael Zipursky, founder of Consulting Success, highlighting his global impact helping consultants build six- and seven-figure businesses that align with their ideal lifestyles.2:33 – 4:11 – Consulting Success Origins: Michael shares how his early ventures led to launching Consulting Success with his cousin, aimed at sharing lessons learned and helping others avoid common pitfalls in consulting.6:02 – 6:24 – Agencies vs. Consulting Firms: Marcel and Michael discuss the blurring lines between agencies and consulting firms, noting how business models are converging and overlapping more than ever.6:30 – 9:39 – AI in Consulting: Michael unpacks the impact of AI on consulting, emphasizing it’s not a threat but a major opportunity—especially for those who learn to leverage it for delivery, marketing, and efficiency.10:15 – 12:33 – Strategy vs. Delivery Firms: The conversation explores how AI disruption will accelerate a divide between strategic firms and commodity delivery shops, urging firms to specialize and double down on expertise.15:03 – 17:09 – The Prompting Advantage: Michael argues that asking the right questions is now a critical skill in the AI era—those with deep expertise will extract far more value from tools like ChatGPT than generalists.17:20 – 22:00 – Solo Consultant vs. Firm Builder: Michael outlines the typical journey from corporate professional to solo consultant, and the eventual fork in the road: stay lean and independent, or scale into a firm.24:27 – 27:00 – The Cost of Scaling: Marcel shares the hidden costs and risks of transitioning from a solo consultant to a firm owner, including potential income dips, increased complexity, and the need for strategic planning.27:00 – 29:54 – Smart Scaling Tactics: Michael stresses the importance of hiring slowly, keeping teams lean with A-players, and being clear on whether you’re optimizing for lifestyle or enterprise value.30:06 – 31:10 – Fractional Talent & Flexibility: The hosts discuss how fractional hires and global talent access have reduced the risk of scaling by allowing firms to incrementally buy back time and capacity.33:01 – 34:58 – Profitability Levers: Michael highlights two key exercises to improve profitability: analyzing profitability by client type and by service offering, often revealing the 80/20 opportunities within the business.36:02 – 39:19 – Strategic Pricing in Uncertainty: In challenging economic times, Michael encourages firms to build stronger business cases and consider raising prices—not lowering them—as a path to higher profitability.Show NotesConsulting Success WebsiteConsulting Success PodcastConsulting Success CourseLove the Podcast?Leave us a review here.