The words behind the numbers.
17 definitions of the finance and commercial terms small agencies run on. Each one carries the formula where there is one, a worked example, and a link to the calculator that does the arithmetic for you.
Rates and multipliers
The numbers that describe an hour of work: what it costs, what you charge, and the gap between them.
Cost Rate vs Bill Rate
The fully-loaded cost of an hour versus what you charge for it — and the margin between.
What Is a Blended Rate?
How a blended rate works for a mixed-role agency team, and when it misleads.
What Is Effective Billing Rate?
Effective billing rate defined — revenue divided by hours worked, with a worked example.
Agency Target & Net Multiplier
What target multiplier and net multiplier mean, and the benchmark range for agencies.
What Is a Rate Card?
The published price per role that every quote is built from. What goes on one, and when to quote a project fee instead.
Margin and revenue
What counts as income, what comes out before margin is measured, and which margin answers which question.
Gross Margin vs Net Margin
One is what is left after delivery cost, the other after overhead too. Which question each answers, with a worked example.
What Is Agency Gross Income (AGI)?
Billings less pass-through costs. The basis for every agency benchmark, and not the AGI on a tax return.
What Are Pass-Through Costs?
Third-party spend billed at cost. Why it leaves revenue before margin is measured, and the cash risk it carries.
What Is Deferred Revenue?
Money collected before the work is done. Why prepaid retainers are a liability and how it differs from WIP.
Delivery and utilisation
How much of the work you do turns into money, and where it leaks on the way.
What Is Realization Rate?
Realization rate defined — fees invoiced against fees earnable — for agencies.
What Is Billable Efficiency?
Billable efficiency defined, and how it differs from utilisation.
Write-Off vs Write-Down in Agency Billing
The difference between a write-down and a write-off, and how each one hits your books.
What Is Over-Servicing?
Delivering more hours than the client is paying for. How to measure the servicing ratio and the four ways to stop it.
Scope and commercial terms
The vocabulary of what was agreed, what changed, and what happens when it ends early.
What Is Scope Creep?
Work added after the scope was agreed, with no change to fee or deadline. The warning signs and how to stop it early.
What Is a Change Order?
What a change order is, and how it differs from scope creep.
What Is a Kill Fee?
What a client owes when a project is cancelled part-way. Typical percentages and how to word the clause so it gets paid.
What Is Retainer Burndown?
A plain definition of retainer burndown, with the formula and a worked example.
Where to go next
A definition tells you what a number means. The calculators turn your own figures into that number, and the guides work through the decision it feeds.
Free · 11 templates & checklists
The Agency Operations Toolkit
Onboarding, discovery, scope control, retainers, delivery, handoff, and offboarding — the templates a small agency runs client work on, in one PDF.