Financial Metrics for Agencies

Most agencies track revenue and forget everything else. Here are the metrics that actually predict success or failure.

Gross Margin

Revenue minus direct costs (contractor fees, software for client work). Should be 50-70% for healthy agencies. Below 50% means you're underpricing or overspending on delivery.

Revenue Per Employee

$150K minimum, $200K+ for well-run agencies. Below $150K means you're overstaffed or undercharging.

Client Concentration

No single client over 30% of revenue. Above that, you don't have a client—you have a boss without benefits.

Average Project Size

Bigger is usually better. Small projects have similar sales and admin overhead to large ones. Track this over time to ensure you're moving upmarket.