How do I improve agency profitability without just cutting costs?

I've trimmed the obvious fat and margin's still mediocre

Pull the revenue and efficiency levers, not just the cost ones: raise prices on value, fix the wrong-fit and over-serviced accounts, lift utilisation sensibly, and keep your AI efficiency gains as margin. Cost-cutting has a floor; pricing and delivery have far more headroom. Most mid-agency margin problems are revenue-quality problems in disguise.

The Long Answer

Once you've trimmed the obvious waste, further cost-cutting hits diminishing returns fast and starts damaging the thing that earns the money, your people and your delivery. The bigger levers are on the other side of the equation.

Pricing is the largest: are you charging on value or on hours, when did you last reprice, are there fossilised rates from years ago, are your proposals leading with outcomes or deliverables.

Client quality is next: run client profitability, find the wrong-fit and over-serviced accounts quietly dragging the average down, and reprice or exit them.

Delivery efficiency is third: sensible utilisation, scope discipline so you stop giving work away, the right seniority mix on each job, documented process so you're not paying for reinvented wheels. And AI: every efficiency gain you keep as margin rather than passing on as a discount goes straight to the bottom line.

Notice that almost none of these are about spending less, they're about earning better for the same or less effort. That's why mid-agency margin problems are usually revenue-quality problems wearing a cost-problem mask. Fix the quality of the revenue and the margin follows, without you having to gut the business to get there.