Most agency owners have no idea if they're actually profitable. Here are the exact metrics that tell you the truth about your business.
You bill $50K this month. Feels good.
But you don't know:
Without metrics, you're flying blind.
The result:
Top agency owners track 12 key metrics religiously.
This is your complete metrics dashboard.
Reality check: If you can't answer "What's our net profit margin?" in 10 seconds, you don't have the right metrics dashboard.
What it is: Total money coming in (before any expenses)
How to calculate: Sum of all client payments received
Why it matters: Growth indicator (but not profit indicator)
Benchmark:
Track: Monthly
Dashboard view:
Jan: $40K
Feb: $45K
Mar: $52K
Q1 Total: $137K
Growth: +30% vs last quarter
Don't fall into the vanity metric trap: High revenue doesn't mean profit.
What it is: What percentage of revenue you keep as profit (after ALL expenses)
How to calculate:
Net Profit Margin = (Net Profit / Gross Revenue) × 100
Example:
Revenue: $50,000
Total expenses: $38,000
Net profit: $12,000
Net profit margin: ($12,000 / $50,000) × 100 = 24%
Why it matters: THE most important metric. Shows true health.
Benchmark:
Track: Monthly
What to do if you're below 15%:
Calculate your current margin
If below 15%, diagnose the problem
Set a target
Track monthly
What it is: Average revenue per project
How to calculate:
APV = Total Project Revenue / Number of Projects
Example:
Q1 revenue: $150,000
Projects completed: 12
APV: $150,000 / 12 = $12,500
Why it matters: Higher APV = more profit (usually)
Benchmark:
Track: Quarterly
How to increase APV:
"We focused on increasing APV from $8K to $18K. Kept the same team size, doubled revenue. The secret? Saying no to small projects."
What it is: Total revenue you'll earn from a client over your entire relationship
How to calculate:
CLV = Average Monthly Revenue per Client × Average Client Lifespan (in months)
Example:
Monthly retainer: $5,000
Average client stays: 18 months
CLV: $5,000 × 18 = $90,000
Why it matters: Determines how much you can spend on sales/marketing
Benchmark:
Track: Annually (recalculate as you gather more data)
Rule of thumb: CLV should be 3X your Customer Acquisition Cost (CAC).
How to increase CLV:
What it is: Cost to acquire a new client
How to calculate:
CAC = (Sales + Marketing Expenses) / Number of New Clients
Example:
Q1 sales + marketing: $15,000
New clients acquired: 10
CAC: $15,000 / 10 = $1,500
Why it matters: Can't scale if CAC > CLV
Benchmark:
Track: Quarterly
Goal: CAC should be 1/3 or less of CLV.
Example:
How to improve:
What it is: Percentage of clients who leave per year
How to calculate:
Annual Churn Rate = (Clients Lost in Year / Clients at Start of Year) × 100
Example:
Clients at start of year: 20
Clients lost: 4
Churn rate: (4 / 20) × 100 = 20%
Why it matters: High churn = revenue treadmill
Benchmark:
Track: Annually (or quarterly for large agencies)
What 20% churn means:
How to reduce churn:
What it is: Percentage of team's time spent on billable work
How to calculate:
Utilization Rate = (Billable Hours / Total Available Hours) × 100
Example:
Team member works: 40 hours/week
Billable hours: 30 hours/week
Utilization: (30 / 40) × 100 = 75%
Why it matters: Shows efficiency. Too low = you're overstaffed or inefficient.
Benchmark:
Track: Weekly (per person and team average)
Common causes of low utilization:
How to improve:
What it is: How much revenue each team member generates
How to calculate:
RPE = Annual Revenue / Number of Employees
Example:
Annual revenue: $1,200,000
Team size: 8 people
RPE: $1,200,000 / 8 = $150,000
Why it matters: Efficiency indicator. Higher = more profitable (usually).
Benchmark:
Track: Quarterly
Industry standards:
How to improve:
What it is: Average days to get paid
How to calculate:
AR Days = (Accounts Receivable / Revenue) × Number of Days
Example:
Accounts receivable: $25,000
Monthly revenue: $50,000
AR Days: ($25,000 / $50,000) × 30 = 15 days
Why it matters: Cash flow. Faster payment = healthier business.
Benchmark:
Track: Monthly
How to improve:
What it is: Percentage of revenue spent on overhead (non-labor costs)
How to calculate:
Operating Expense Ratio = (Operating Expenses / Revenue) × 100
Operating expenses include:
- Rent
- Software
- Insurance
- Marketing
- Equipment
(Does NOT include labor/salaries)
Example:
Monthly revenue: $50,000
Operating expenses: $8,000
Ratio: ($8,000 / $50,000) × 100 = 16%
Why it matters: Lower = more profit
Benchmark:
Track: Monthly
How to reduce:
What it is: Profit margin by project
How to calculate:
Project Profitability = (Project Revenue - Project Costs) / Project Revenue × 100
Example:
Project revenue: $20,000
Labor cost: $12,000 (120 hours × $100/hour)
Other costs: $1,000 (software, tools)
Total cost: $13,000
Profit: $7,000
Profitability: ($7,000 / $20,000) × 100 = 35%
Why it matters: Some clients/projects lose money. You need to know which ones.
Benchmark:
Track: Per project
What to do with unprofitable projects:
Pro tip: Track project profitability in a spreadsheet. Color-code: Green (30%+), Yellow (10-30%), Red (<10%). Fire all red clients within 90 days.
What it is: Total value of potential deals in your sales pipeline
How to calculate:
Pipeline Value = Sum of all active opportunities
Example:
- Lead A: $15,000 (20% chance)
- Lead B: $25,000 (50% chance)
- Lead C: $10,000 (80% chance)
Total pipeline: $50,000
Weighted pipeline: ($15K × 0.2) + ($25K × 0.5) + ($10K × 0.8) = $23,500
Why it matters: Predicts future revenue. Know if you need more leads.
Benchmark:
Example:
Track: Weekly
If pipeline is too small:
If pipeline is healthy but not closing:
Track these 12 metrics in one place:
| Metric | Current | Target | Status |
|---|---|---|---|
| Gross Revenue | $50K/mo | $60K/mo | 🟡 |
| Net Profit Margin | 18% | 20% | 🟡 |
| Average Project Value | $12K | $15K | 🔴 |
| Client Lifetime Value | $75K | $90K | 🟡 |
| CAC | $1,200 | <$1,500 | 🟢 |
| Churn Rate | 15% | <10% | 🔴 |
| Utilization Rate | 72% | 75% | 🟡 |
| Revenue per Employee | $140K | $150K | 🟡 |
| AR Days | 22 | <15 | 🔴 |
| Operating Expense Ratio | 18% | <15% | 🟡 |
| Project Profitability | 28% | 30% | 🟡 |
| Pipeline Value | $180K | $200K | 🟡 |
🟢 = On target | 🟡 = Close | 🔴 = Needs work
Choose your tool
Connect data sources
Set up formulas
Set benchmarks
Review weekly
Review monthly with team
The trap: 50-metric dashboard. You look at it once, never again.
The fix: Start with these 12. Add more only if needed.
The trap: "We have 10,000 social media followers!" (But zero clients from social.)
The fix: Track metrics tied to revenue and profit only.
The trap: Track everything. Do nothing.
The fix: Every metric should have a target and action plan.
Example:
The trap: Check once per quarter. Problems fester.
The fix: Review weekly. Deep dive monthly.
The 12 essential agency metrics:
If you track nothing else, track:
Those two tell you if you're actually making money.
Set up your dashboard this week. Review it every Monday.
What gets measured gets managed.
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