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Marketing agency profit margin calculator

Is my agency actually profitable, or just busy?

Your numbers

10
$3,000
50%

Research, writing, design and video drafted for review instead of made from scratch. Reviewing and approving stays with you — set this to whatever you believe.

You keep

$4,000

a month — 13% of $30,000 agency gross income, or $48,000 a year.

Delivery margin · benchmark 60–70%
50%
Overhead share
37%
Profit per client
$400
Where a month's gross income goes
  • Delivery cost
  • Overhead
  • What you keep

Scout7 is what moves the second column — it drafts the research, writing, design and video, and nothing goes out until you approve it.

Moving 50% of production off your team turns $4,000 a month into $11,500 — $90,000 a year, from the same clients.

What this works out

  • Agency gross income, separated from pass-through ad spend
  • Delivery margin, overhead share and net margin against agency benchmarks
  • Contribution and net profit per client
  • Break-even client count and revenue per delivery person

How it’s calculated

Every figure above comes from these steps, so you can check the working or run it by hand.

  1. 1

    Agency gross income is what clients pay you minus anything you pass straight through to ad platforms. Every margin is measured on that number.

  2. 2

    Delivery cost per client is the hours it takes at a fully loaded hourly cost, plus any contractor fees.

  3. 3

    Delivery margin is gross income minus delivery cost, divided by gross income. Benchmarks say 60 to 70 percent per project and 50 percent or more overall.

  4. 4

    Overhead — rent, tools, insurance, your own salary if you are not in delivery — should run 20 to 30 percent of gross income.

  5. 5

    Net margin is what is left. Most agencies sit at 10 to 15 percent; the target is 25 percent.

Questions

Why exclude ad spend from revenue?

If a client pays you $10,000 and $7,000 goes to Google and Meta, your agency earned $3,000. Measuring margin against $10,000 makes you look twice as profitable as you are.

What is a fully loaded hourly cost?

Salary plus benefits, software and the hours nobody bills, divided by the hours actually worked. For an employee it is roughly 1.4 times salary divided by working hours; for yourself, use what you would have to pay someone to do the work.

What net margin should I aim for?

Parakeeto puts most agencies at 10 to 15 percent with a 25 percent target. Promethean Research found agencies under ten people averaging 19 percent after tax, so small and focused is not a disadvantage.

Learn the arithmetic

The Academy guides behind this calculator. Free, no signup.

Margin is the hours you stop paying for.

Scout7 carries the delivery load behind each retainer — one workspace per client, drafts queued for your review, nothing published without your sign-off.

Scout7 for agencies

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