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It seems the buzzword on everybody’s lips these days—including web designers—is “passive income!”

We all want to know:

  • how we can make the most money?

  • what’s the fastest way to get there?

  • what will require the least effort on our part!?

Now, obviously we have other very important reasons for choosing the path we do, like…

  • how we can make the biggest impact

  • who we are most passionate about serving

  • and just generally enjoying what we spend our waking hours doing

But for the most part, the questions I get around building a web design business tend to center around the making money part.

So today I want to talk about the 3 most common web design business models and which one might be right for you based on your goals and what stage of business you are in.

So whether you are a brand new designer scratching your head about which model makes sense, or you’re an experience designer wondering how you can blow the top off that income ceiling and start scaling your business, then this list of pro’s and cons I’m sharing for each web design business model is for YOU!

template SHOP vs. agency vs. 1:1 CUSTOM WEB DESIGN

Which web design business model is better?

Alright! Let’s dive right into the most common model for getting started…

Web Designer Business Model # 1

Providing 1:1 custom web design services to clients

So how you choose to implement this can look a million different ways, but basically, this model means that you market your self as a service-provider, where you personally help one client at a time with your web design expertise.

Whether that’s building them a site from scratch, coding them a fancy new plugin, performing a website, refreshing their home page design, whatever!

So let’s talk the pros of this model…

The Pros of 1:1 services

It’s the easiest to start TODAY

All you need is one client to start bringing in revenue.

Overhead can also be extremely low if needed.

We’re talking…

  • You need a laptop ‍

  • Wifi

  • And a cozy place to settle in and get to work ☕️

You don’t even need some crazy marketing strategy at first, as often that first client comes from people you already know.

And after that? You still don’t need a massive audience size to consistently land clients. It can literally take 1 ideal client raving about your business to completely fill your books.

You are making all the decisions

When you’re a one-woman show, you have control over everything from how you attract clients, to what needs to go in that footer design.

Want to earn more money? You can do what’s needed to raise your rates, or take on more clients.

You decide how busy you want to be, and whether you work from 9-5 or if you do your best designing after dark.

Don’t enjoy enjoy coding? Hate being stuck on retainer? You get to decide how your structure your business and the packages you offer so that they suit your lifestyle and the way you like to work.

1:1 services = more revenue per sale (A.K.A fewer clients needed to reach your goals!)

Serving clients one-at-a-time tends to come at a much higher price point than say selling a DIY template.

So let’s say you are charging $5K per custom website and your revenue goal for the month is $15K.

You’d only need to find 3 clients per month in order to meet that goal!

Whereas with something like a template, that isn’t custom created for that client, and isn’t as “done-for-them” as 1:1 services are, you might be generating more like $300-500 per sale.

Meaning you’d have to go out and find 50 people willing to buy your thing in order to hit your goals for that month.

The CONS of 1:1 services

Alright, now that we’ve talked pros, it’s time to look at the downside to offering 1:1 design services…

Managing clients can be like herding cats…

Yep…sorry! There’s no way around it.

You have to actually deal with people when you provide 1:1 services.

But, the good news is, if you are attracting the right type of client, and you take the time it takes to set up super sexy systems and processes for your business, you can totally streamline the client handling process and bypass those red flag clients and their low quality content altogether!

This means no more missing deadlines, no more playing email tag 50 times a day, no more negotiating your prices, and no more time spent chasing down clients for payment or to submit their content.

So really, this is only as big of a con as you let it become! Better systems means less time spent client-wrangling, and more time spent doing what you love.

I teach my complete client handling process from inquiry to launch day, and how to set your business up to attract the right client in the first place in my Square Secrets Business™️ course.

Your client provides the content (which impacts overall design)

It’s pretty hard to build a premium-level website using ‘ick’-level content.

But when you are working 1:1 with clients on their website, rather than say designing a template upfront to later sell to anyone who wants to buy it, well…you do kinda have to work with what you’re given.

This means if they don’t have the budget for professional brand photography, or—at the very least—some quality stock photos, you might be stuck using that embarrassing phone selfie they sent you.

But again! This is totally dependent on the type of client your business is set up to attract!

Which is why in my Square Secrets Business™️ course, I include my bonus Guide to building a web design brand that attracts premium clients…the type of clients who naturally tend to come with higher quality content that you’re actually excited to get your hands on!

And higher quality content equals better looking websites to stick in your portfolio for attracting future dream clients!

Your income is tied to your hours

Even Beyonce only has 24 hours in a day…so when it comes to offering 1:1 services, there really is a cap on many clients you can take on each month.

That means, if you’re already fully-booked out, but still want to earn more money, all that’s really left is to raise your prices. (Which you should totally do, btw…so if you’ve been on the fence about raising your rates, this is your sign to go for it!)

But, the pro to this is that your income is super easy to predict once you are consistently landing clients, and if you decide down the road you’d like to move to a more scalable model where your dollars are no longer tied to your hours, then you can continue to serve clients on the side to support you while you get your new idea fully up and running!


Web Designer Business Model # 2

Selling Website Templates or Plug-ins

Now, obviously selling templates and plug-ins are not the only options for setting up passive income as a web designer, but since they are the ones I’m asked about most often, I’ll use them as my example for sharing the pros and cons of this model.

The PROS of STARTING A TEMPLATE SHOP

You make all the content & design decisions

You are the one in charge of sourcing all the images, copy, color palettes, and other branding elements you’ll use in your template design.

No having to beg for better photos, or find a place for that embarrassing animation your client is insisting be used. (1998 called and they want their dancing button back!)

Every last inch of your template’s design and functionality is yours to create…zero rounds of client edits required.

You can serve more people at the same time

Back when I was still designing custom websites for clients 1:1, I reached a point where there was no way I could possibly serve every single person that wanted my help.

Yes, I could have just continued to increase my prices until I was only affordable to a few select people, but I wasn’t just looking for ways to scale my income. I wanted to scale my impact as well!

When you offer a passive product, you can be nowhere near your laptop, and still be helping hundreds, thousands, or even millions of people.

And all those people that DM’d you saying “Ugh, I’m obsessed with your work, but I just can’t afford you…” well, thanks to passive income products often being at a lower price point than 1:1 services, now they can!

You only have to create it once

This is the true pull of the one-to-many model of selling a passive income products like Squarespace templates or plug-ins.

You create the thing once, and then it can be sold to infinity number of people. Unlike the 1:1 service and agency models where you have to design something from scratch every time you want to make a sale.

So it’s highly scalable, which is a pretty strong argument in favor of this model…

BUT, the potential for passive income does come at a bit of a price, so let’s take a quick peek at that cons list, shall we?

The CONS of STARTING A TEMPLATE SHOP

DIY solutions = DIY prices

While it’s possible to create a premium version of whatever passive thing you are selling, clients simply won’t be willing to pay as much for something that requires work on their part before they can use it.

Instead of attracting the client that has more money than time, you are now attracting the client that has more time than money, the ones who aren’t afraid to roll up their sleeves and put in a bit of work in order to save themselves a little cash.

So for this reason alone, you will tend to attract clients in a much earlier, less-established stage of their journey.

You need a massive audience to make decent money

Because your earnings per sale will tend to be a lot less on a passive income product than a 1:1 service, you are going to need to make a whole lot more sales per month.

And in order make more sales, you are going to have to find a way to start attracting more people!

In order to pay the bills with passive income, you really do need to have a list of people already lined up and ready to buy. It isn’t like web design where you can run out and hand search for an extra client here and there if you need more money.

Which kinda leads to my next point…and that is that passive income is anything but passive!

Passive income is anything but passive

Even though you only have to create the thing once, it still can take a great deal of upfront work before you ever start to see any cash coming in, and if you want to continue to sell that product once it’s created, the work never really stops.

Instead of spending your time designing, you are now spending your days marketing, setting up sales funnels and sales pages, creating content, and playing customer service agent to your new online shop!

To truly scale this model, you may need to bring on a team member or two, which means taking some of that sexy new passive income you’re earning and dumping it straight back into your expenses budget!

Income isn’t as predictable as 1:1 services

When you work 1:1 with clients, you can pretty much predict your entire income for the year.

You take the price of your packages, how many clients you can realistically serve in a month, and times that by 12 months.

And voila. Your yearly web design salary.

But when you are selling to the masses, your sales can vary wildly from month to month, and you won’t know until the month is over what you can expect to bring in.

You need more than one product to create a “shop”

Imagine you walk into a store, money in hand, excited to do a little retail therapy and you discover that this store only sells one product.

And not even different brands of the same product. Just one lonely little item sitting on the shelf.

Awkward, right?

The launch of your template shop is no different. You’re probably going to want at least a handful of options uploaded to get your shoppers in the mood!

Whereas when you provide 1:1 services, your really only need 1-2 packages, since they can be easily tweaked to fit each client’s unique needs.

Templates will need to be completed in advance whether they make you money or not, whereas with 1:1 clients, the work doesn’t start until they’ve made that initial payment!

Web designer business model #3:

Starting a web design agency

An agency is really just a way to scale the work you are already doing as a 1:1 service provider.

But instead of you doing all the work, you now have a team of people to do the work for you, and you are just responsible for overseeing them.

So let’s start with the pros!

The pros of starting a web design agency

You have capacity to take on more clients

When you run an agency, all it takes to increase your client-serving capacity (and therefore your income) each month is to bring on more designers. You are no longer limited to how many hours you can personally work in any given day.

We actually recently interviewed past Square Secrets Business™️ Student Sydney Williams and she shared an incredible story about how she was able to go from $3K months as a designer to $30K months as an agency owner!

(Definitely worth a listen! You can find her story in this video, or read her interview here!)

So yeah, increased ability to serve and earn is really the main pro here…

That, and the fact that somebody else is doing the client work while you oversee.

But this could potentially be a con as well….so let’s move on to talking about some of the downsides of going the agency route to paint the whole picture.

The cons of starting a web design agency

Hiring can be expensive

Despite online businesses having super low overhead, like not needing a physical office space, or commuting back and forth to your day job, there’s one expense that remains…and that is paying the people who work for you.

So you really need to make sure you are consistently landing enough clients to make it worthwhile before you start bringing on extra hands. Otherwise, you could be paying people to sit around and wait for the phones to ring!

Communication gets more complicated the more people you add

A few short months ago, the PB business was still just a two-woman show. It was super easy to stay on the same page about everything, and we legit hardly ever held team meetings.

Our roles were super clear cut, and there was never a question of who was handling what. Communication consistent mostly of silly, relatable memes and fun life updates, with the occasional idea to bounce off each other.

Fast forward a few months to where we are now a team of 5!

And even though I hit the actual lottery when it comes to my amazing team members, there’s no denying that communication suddenly got a whole lot more complicated!

The more hands a project has to pass through before it’s complete, the more potential for missed steps.

This is where starting out offering 1:1 design can really help you to nail down your processes first, and get things super streamlined and efficient, before you go adding more people to the mix!

Starting as a solo designer before you scale through passive income products or the agency model also makes it easier to play around with different niche ideas until you discover the one that you are most passionate about. A getting solid on your niche will only make your marketing game that much stronger when you do go to scale your business!

So if after hearing today’s pros and cons, you’re still not sure which route is right for you, I still recommend starting with 1:1 services, as it will be the perfect foundation for any other direction you want to take your business in as it grows!


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