Agency profitability
See margin while you can still act on it, not at month-end.
What is agency profitability and how do agencies improve it?
Why month-end is too late
If margin only appears when the accountant closes the month, you're steering by the rear-view mirror. The over-servicing has already happened, the scope has already crept, and the unprofitable project is already delivered. Real-time profitability moves the number to where you can still change the outcome.
How it's calculated
Project profit is revenue minus the cost of delivery. Cost of delivery is mostly logged hours multiplied by an internal cost rate, plus pass-through costs. The maths is simple. The hard part is keeping the inputs live and connected to the work.
What you need to see it live
Real-time profitability needs three things in one system: time logged against the right project, an internal cost rate per person, and each project's budget. When those share a data model, margin recalculates the moment a timesheet is saved.
What it changes
With live margin, you catch scope creep early, price the next project from real data, and steer the studio's mix toward the work that actually pays. Profitability stops being a quarterly surprise and becomes a daily instrument.
FAQ
How do you measure agency profitability?+
Subtract the cost of delivery (logged hours at an internal cost rate, plus expenses) from project revenue. Expressed as a percentage of revenue, that's your project margin.
What is a healthy agency profit margin?+
Many agencies target a 20-30% net margin overall, with project-level gross margins above 50%. The number matters less than seeing it early enough to protect it.
Why measure profitability in real time?+
Because margin you only see at month-end is margin you can no longer fix. Live data lets you correct a slipping project while it's still running.
Is AgencyFlo project profitability software?+
Yes. AgencyFlo is project profitability software that calculates margin per project in real time from logged hours, cost rates and budgets, so you see which work is profitable while it's still live rather than at month-end.
Why is agency profitability so hard to see?+
Because the inputs sit in different tools: time in one, rates in a spreadsheet, invoices in accounting. Margin only assembles when someone reconciles them at month-end, by which point a slipping project is already delivered. A closed-loop system keeps all three on one record, so margin stays current.
What's the difference between project margin and agency profitability?+
Project margin is revenue minus delivery cost on a single engagement; agency profitability is the same maths rolled up across every project, plus overhead. Project profitability software computes the per-project number live, which is the lever owners can actually act on week to week.
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