The Economics of Creativity
We sell expertise and time. This dashboard demystifies our finances and shows how your role is crucial to our collective success and growth, especially operating in a high-cost city like London.
Part 1: How Money Flows
Understanding our agency's financial engine starts with two simple questions: Where does our money come from, and where does it go? This section breaks down our primary income sources and our main categories of expenditure.
How We Earn Revenue
1. Retainers (The Foundation)
Fixed monthly fees for a set scope of work. This provides predictable, recurring revenue that covers our core fixed costs like salaries and rent.
2. Project Fees (The Growth Driver)
One-off fees for a defined deliverable, like a new website. These have high potential for profit if we scope and execute them efficiently.
3. Mark-ups & Reimbursables
A fee (e.g., 15%) added to external costs we manage for a client, like media spend or print production. This is a low-risk income stream.
How We Spend It
Our largest expense is always our people. This makes managing our time effectively the most powerful way to improve profitability.
Part 2: Your Role in Profitability
The agency's financial health isn't just a spreadsheet in the finance department; it's the direct result of our daily work. This section provides interactive tools to explore how project management and time tracking directly shape our bottom line.
Interactive Profitability Scenario
See how small changes in a project's scope affect its margin. Adjust the sliders to see the real-time impact.
✨ Scope Negotiation Coach
Facing unexpected client requests? Describe the extra work requested below. Our AI consultant will provide a **risk assessment** and a **suggested script** to help you protect the margin while maintaining the client relationship.
The Utilisation Rate
This is the percentage of your time that's billable to clients. A healthy target is 70-85%. The rest is for vital non-billable work like training and internal projects.
Accurate timesheets are the data source for this metric and are essential for pricing future work profitably.
Why It Matters
Every hour spent beyond the initial estimate on a fixed-fee project directly erodes our profit margin. Flagging scope creep early is everyone's responsibility and protects our ability to invest in growth.
Part 3: Measuring Our Success
We use key metrics to gauge the health of our business. These numbers tell us how well we're pricing our work, managing our time, and controlling our costs. Healthy metrics are the fuel for our future growth.
Agency Fee Income (AFI)
This is our true revenue: Total Revenue - Pass-Through Costs. It's the money we earn for our expertise and use to pay salaries, rent, and generate profit. It's the most accurate measure of our agency's size.
Operating Margin
This measures our core profitability. A healthy agency targets 15-20%, while a world-class one exceeds 20%. It shows how efficiently we turn AFI into profit.
The Economics of Growth
Profit isn't just a number; it's the fuel for our future. A healthy margin allows us to invest back into the things that make us a great agency.
Your Role Summarised
Focus on Value
Prioritise your efforts on high-value, fee-generating tasks for our clients.
Track Time Accurately
Complete timesheets daily. It's our primary data for profitability and future pricing.
Manage Scope
Flag scope creep to your PM immediately. Protecting the margin is a team effort.
Be Efficient
Use agency tools effectively. Every minute saved is profit gained.