Profit leak calculator
Work out what a few points of margin is worth to you.
Move the sliders to match your agency. The three figures update as you go, and nothing you type leaves your browser.
This calculator turns your agency inputs into three annual figures. What a margin swing is worth, what closing a utilisation gap is worth, and how much working capital a shorter payment cycle frees up. Every formula is shown next to its result, and the maths runs in your browser.
Your numbers
Nothing you type here is sent anywhere. The maths runs in your browser.
Fee income, excluding pass-through ad spend.
Everyone whose time is meant to reach a client.
Share of available hours that get billed.
What you think is realistic, not perfect.
Your blended rate card figure per hour.
From invoice date to money in the bank.
A swing worth modelling. Four is a common starting point.
What that is worth
Three separate figures. The first two are profit. The third is cash you stop borrowing.
- A 4 point margin swing on $2,400,000
- $96,000
- Revenue x 4 percent. This is the size of the prize from repricing and cost work, not a promise that you will capture all of it.
- Closing 10 points of utilisation
- $216,000
- 8 people x 1,800 available hours x the gap x $150. Assumes you can sell the recovered hours.
- Getting paid in 30 days instead of 55
- $164,384
- Daily revenue x 25 days. This is working capital freed up, not profit earned. It is the money you currently cover on a credit line.
These are calculations on the figures you entered, using the formulas shown under each result. They are not a forecast, not a client result, and not advice. What they are good for is deciding whether this is worth an hour of someone’s attention.
Questions
What the numbers mean
01How is the margin figure calculated?
Annual revenue multiplied by the number of margin points you are testing. Four points on $2.4M is $96,000. It shows the size of the opportunity, not a guarantee you capture all of it.
02How is the utilisation figure calculated?
The gap between your current and target utilisation, multiplied by billable headcount, 1,800 available hours a year per person, and your average billable rate. It assumes you can sell the recovered hours.
03Why is the payment cycle number not profit?
Because it is cash, not earnings. Collecting in 30 days rather than 55 frees up working capital you currently fund from a credit line. You stop paying interest, you do not book new revenue.
04Is my data sent anywhere?
No. The calculation runs entirely in your browser and nothing is transmitted or stored. There is no form to fill in and no email gate.
05Are these numbers a forecast?
No. They are arithmetic on the figures you typed, using formulas shown next to each result. They are not advice and not a prediction of what any particular agency would achieve.
Next step
Now find out which client is behind it
The calculator sizes the gap. Working out which accounts create it takes a look at your last twelve months, which is what the call is for.