Retainer agency margin
An agency has $60,000 monthly revenue, $22,000 employee delivery cost and $8,000 contractor cost.
- Revenue: $60,000
- Employee delivery: $22,000
- Contractors: $8,000
- Overhead: $9,000
Services
Agency Margin Calculator
Estimate agency gross margin, net margin and revenue per delivery dollar.
Services
Agency Margin Calculator
Use this for marketing, design, development or consulting agencies that need to separate delivery labor from overhead.
How to use this calculator
Start with conservative inputs, copy the result, then test a best-case and worst-case version. For production decisions, compare the estimate against actual accounting, analytics and payment data.
Best used for
Use this when checking whether client revenue leaves enough margin after delivery labor, contractors and overhead.
Formula
Agency margin separates delivery cost from overhead so you can see whether client work is priced high enough before admin and sales costs are added.
Formula
Gross margin = (revenue - delivery cost) / revenue. Net margin = net profit / revenue.
Example
How to read the result
- Gross margin shows delivery health before overhead.
- Net margin shows whether the agency can support sales, admin and profit.
- Founder delivery time should be costed if the work depends on it.
Common mistakes
- Treating founder labor as free.
- Letting contractor cost grow faster than client revenue.
- Only reviewing margin after projects finish instead of before pricing them.
FAQ
What is a healthy agency gross margin?
Many service businesses aim for enough gross margin to cover sales, admin and profit. The right target depends on delivery model and seniority.
Should founder delivery time be included?
Yes if founder time is needed to deliver client work. Otherwise margin can look better than the business really is.
How is this different from net profit?
Gross margin focuses on delivery economics. Net profit also subtracts overhead, sales, admin and management costs.
Important limits
- Untracked founder time can make agency margins look too high.
- Project overruns, unpaid revisions and scope creep can reduce real margin.