Agency profitability calculator
This works out what your agency earns at its current utilisation, what a single percentage point of utilisation is worth in a year, and the utilisation you would need to hit your target margin. Five figures, all of which you either know or can estimate closely enough to be useful.
Built for founder-led UK agencies of roughly £500k–£2M. Estimates are fine. The point is the size of the gap and which lever closes it, not accuracy to the pound.
This calculator needs JavaScript. The arithmetic, if you would rather do it by hand: billable people multiplied by available days multiplied by utilisation gives billable days. Billable days multiplied by your day rate gives gross income. Subtract loaded salary cost and annual overhead, and what remains is operating profit.
Nothing is sent anywhere. The figures stay in your browser.
What each figure means
| Input | What to enter | Where people go wrong |
|---|---|---|
| Billable people | Everyone whose time is priced into client work. Count a part-billable director as the fraction they deliver. | Counting the whole team, which makes utilisation look worse and capacity look larger. |
| Average salary | Average base salary across those people. The calculator adds 20% for employer costs. | Using the founder's salary, which is usually set for tax rather than for the market. |
| Available days a year | Working days less holiday, bank holidays, training and internal time. 220 is a reasonable start. | Using 260, which overstates capacity by about a fifth before anyone has done anything. |
| Average day rate | What a day of delivery is billed at on average across grades, after any standing discount. | Entering the rate card rather than the rate achieved. |
| Annual overhead | Everything not delivering client work: premises, software, leadership and new business salaries, finance, administration. | Leaving out the non-billable share of part-billable people, which is the most common reason an agency thinks it is more profitable than it is. |
What the numbers tell you
The value of one point
One percentage point of utilisation across the team, in pounds a year. Most founders are surprised by how large it is, and it reframes timesheet discipline as a commercial question.
The utilisation your margin needs
The rate required to hit your target margin at today's day rate and cost base. If that number is above 85%, utilisation is not your lever and the price is.
Where the profit actually sits
The split between delivery cost and overhead shows which side to work on. An agency with healthy contribution and thin profit has an overhead problem, not a delivery one.
The honest starting point
Run it with the utilisation you believe you have, then again with the figure your timesheets support. The difference between those two runs is usually the real finding.
What to do with the gap
Check the utilisation figure is real
Hours booked weekly, work beyond the fee counted as cost. The method is on agency utilisation rate.
Find the account that drags the average
One or two accounts usually carry the gap. Compare fee against delivered cost per client using project and retainer margin.
Decide between rate and utilisation
If the required utilisation is above 85%, raising the day rate is the shorter route. Below it, resourcing and scope discipline will get you there.
Check overhead separately
If contribution is strong and profit is not, the answer is on agency overhead ratio and not here.
Common questions
How accurate does this need to be?
Close enough to see the size of the gap. Average salary within a few thousand and utilisation within five points will not change which lever you should pull. Run it twice, once with the utilisation you believe and once with the figure your timesheets support, and the difference between the two is usually more useful than either number.
Why does it add 20% to salaries?
Employer National Insurance, pension contributions and the tools each person needs sit on top of base salary, and leaving them out makes delivery look cheaper than it is. Twenty per cent is a working approximation for a UK agency. If you know your own loaded figure, enter a salary that already reflects it and treat the uplift as your margin of safety.
The required utilisation came out above 90%. What does that mean?
Your day rate is too low for your cost base, because no agency sustains that level across a team. Raising the rate, changing the mix of grades delivering the work, or reducing overhead will each move it. Pushing people towards 90% will produce burnout and quality problems long before it produces the margin.
Does this replace proper management accounts?
No. It sizes the problem and points at the lever. Acting on it needs cost recorded against jobs weekly, which is the same mechanism described in project margin that arrives too late. Treat this as the conversation starter, not the reporting system.
Related reading: Fractional COO for agencies · Agency utilisation rate · Agency project and retainer margin · Agency overhead ratio · Busier than ever, and the bank balance disagrees
Bring the numbers to a call
If the gap looks large, the next question is which of your accounts is producing it. Bring your figures from this page and three months of revenue by client.
Book an Operational Clarity Call →