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Creative Agency Profit Margin Calculator

Your agency’s gross margin, EBITDA and payroll ratio. Enter revenue, team costs and fixed costs to see whether the business is healthy.

Annual P&L

The three numbers that matter

  • Gross margin: what’s left after direct production costs. Healthy: >50%.
  • Operating margin / EBITDA: what’s left after paying the team and fixed costs. Healthy: 15–25%.
  • Payroll ratio: the % of revenue that goes to salaries. Healthy: 50–60%.

What to change if the numbers don’t work

The temptation is to lay people off. The cure is almost always worse: without a team you can’t bill, and the payroll you cut comes back as pricier outsourcing. Try this first: raise prices (15% higher prices lift margin by 10 points), drop low-margin services, and raise team utilization (going from 60% to 75% bills 25% more without hiring anyone).

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