Why Tech-Enabled Services Beat Traditional Agencies on Margin

19 Jun 2026 · 1 min

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In this segment, Eric Siu explains why tech‑enabled services (the model used by Single Grain and Single Brain) achieve substantially higher gross margins than traditional agencies and pure‑software businesses. He cites typical margin ranges—45‑55% for agencies, 70‑85% for tech‑enabled services, and 80‑90% for pure software—highlighting that agencies struggle to compound knowledge because they must constantly retrain staff and reorganize processes. In contrast, tech‑enabled services treat services as software, allowing labor costs per account to fall and enabling reusable intellectual property (IP) to be applied across many clients, which creates compounding value and higher profitability.

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And so for us, when you look at the gross margin of a business, like an agency, for example, 45 to 55%, tech-enabled services software, which is where we are as Single Grain and Single Brain, 70 to 85%, and then pure software, 80 to 90% or so. Traditional agency, this doesn't work either because the problem is that your knowledge doesn't compound. And so again, you can't compound 'cause you have to retrain people, you have to reorganize all the time, and you have to just redo, redo, redo, right? Now, if you have tech-enabled services, services as software, you have falling labor costs per account, okay? Reusable IP that absorbs across client context. So work that you've done for client A, let's say you do it 100 more times, it compounds, okay?