Agency Margin Calculator

Because most agencies track revenue well but poorly track the internal cost of delivery. Without knowing how many hours a project consumed at what cost rate, the margin is a guess until months after the project ends.

Healthy agencies typically target 40% to 60% gross margin and 15% to 25% net margin after overhead. Margins below 30% gross usually indicate underpricing, scope creep, or inefficient delivery.

A loaded cost rate includes not just salary or contractor pay but also benefits, taxes, equipment, and a share of office and tool costs. It represents the real cost of having someone work for one hour.

The simplest approach is a flat percentage of direct costs. More precise methods allocate based on headcount, hours consumed, or revenue share. The key is consistency so you can compare margins across projects.

Price based on value rather than hours, reduce rework through better briefs and approvals, improve scoping accuracy, track hours to catch budget overruns early, and negotiate change orders instead of absorbing scope creep.