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NC Niall Cotter On Build a Better Agency Podcast

“If you're running on a retainer and all of a sudden, due to AI, you can do the work at 50% of the delivery cost, and then you sit on that and hope nothing will happen, then everything is good until the client comes back and asks for efficiency discounts.”

Build a Better Agency Podcast · Agency Business · November 2026

“If you're running on a retainer and all of a sudden, due to AI, you can do the work at 50% of the delivery cost, and then you sit on that and hope nothing will happen, then everything is good until the client comes back and asks for efficiency discounts.” — Niall Cotter, Build a Better Agency Podcast

Context

On why agencies need to know profitability by client and service line, he gives an example of how AI-driven savings on a retainer can evaporate if the agency doesn't track them.

Listen to the episode → More from Niall Cotter → More Agency Business quotes →

Transcript

Build a Better Agency Podcast Around 17:54 into the episode
Niall Cotter

Right.

Drew McLellan

…understand is profitability by client and by service line. So if you anecdotally think that you are losing your shirt every time you take a web project, and yet you keep taking web projects because it's cash flow and you don't really look at the numbers, it's pretty hard to run your business well.

Niall Cotter

Right, right. Or if you're running on a retainer and all of a sudden, due to AI, you can do the work at 50% of the delivery cost, and then you sit on that and hope nothing will happen, then everything is good until the client comes back and asks for efficiency discounts.

Drew McLellan

Or on the flip side, you are running a retainer and you're not tracking your people's time because you don't price out every project. But every month you've given them 20 or 30 or 40 extra hours and you think it's profitable. Again, without the raw data, I don't know how you run your business well…

Niall Cotter

Sure. Well, here's some of the, maybe for your listeners, here are the kind of, there's three ratios that I kind of always recommend that agency owners look at. The first one is payroll as a share of AGI.

Drew McLellan

Right.

Speaker names come from our own diarization. The position is estimated from where the line sits in the episode.

More from Build a Better Agency Podcast

“Having been on the purchasing side myself, it's quite easy to poke holes in the story of a business. Your numbers need to meet the story that you're telling. If it's a growth story, you need to have shown that historical growth. If 40, 50% of your clients are from five to 10 companies, that's a weakness. And is it the owner's relationships that are holding this business together? Am I buying the business or am I buying the owner?” — Niall Cotter, Build a Better Agency Podcast “I think it's about 10 or 15 people. That's when an agency owner no longer knows everything that's going on inside the agency. When you're five people you're like a unit that just moves together, but you get to double digits and all of a sudden you have people working on work that other people don't see. The owner can no longer keep their finger on the pulse, and you need checks and balances that you did not need at four or five people.” — Drew McLellan, Build a Better Agency Podcast