What Is Agency Gross Income (AGI)?
Agency gross income, usually shortened to AGI, is what an agency bills less the third-party costs it recovers at cost. Media budgets, print, and rebilled contractor fees come out. What remains is the income the agency earned for its own work.
It is the same figure as net revenue, and the two names are used interchangeably. Every per-head and margin benchmark in the industry is calculated on it.
Note on the abbreviation: this is not the AGI on a personal tax return. Adjusted gross income is an individual tax concept and has nothing to do with agency reporting beyond sharing three letters.
The formula
Agency gross income (AGI) = Gross billings − Pass-through costs
AGI per FTE = AGI / Full-time-equivalent headcount
Why agencies report on AGI rather than billings
Because billings measure how much money moved, not how much the agency earned. A media shop placing $3m of advertising for $450,000 in fees is a $450,000 business that handles $3m. Reporting the larger number produces margins that look catastrophic and growth that never happened.
It also makes agencies comparable. Two studios with identical fee income look wildly different on billings if one buys media and the other does not. On AGI they sit side by side, which is why industry surveys and valuation multiples specify it.
The mechanics are covered in pass-through costs, which is the line item AGI removes.
AGI per head, the number that gets benchmarked
Divide AGI by full-time-equivalent headcount and you have the single most quoted agency benchmark. It answers whether the team is producing enough income to support itself, without any of the noise that headcount growth or media buying introduces.
Count the FTE honestly. Part-timers count as their fraction, long-term contractors embedded in delivery count, and the founder counts even when they also do the invoicing. Agencies flatter this number by excluding people, which only delays finding out.
The AGI per FTE calculator runs the figure and shows it against published ranges, and revenue per employee is the same measure under the more general name.
Where AGI sits in the rest of the numbers
AGI is the denominator for almost everything else. Gross and net margin are measured on it, not on billings. The net multiplier divides it by direct labour expense. Overhead rate expresses overhead as a share of it.
Get AGI wrong and every downstream figure inherits the error, usually in the direction of making the business look worse than it is. An agency reporting 8% margins on billings might be running 20% on AGI, which is a different conversation with a bank or a buyer.
The reverse error also happens. Marking up media and then treating the whole spend as pass-through understates AGI, because the markup portion is genuinely yours. Only the cost you recover at cost comes out. Check the split with the markup vs margin calculator if the rebilling is not clean.
AGI against the numbers around it
| Term | Meaning |
|---|---|
| Gross billings | Everything invoiced, including money passed to third parties |
| Agency gross income (AGI) | Billings less pass-through costs. What the agency earned |
| Net revenue | The same figure as AGI, under a different name |
| AGI per FTE | AGI divided by full-time-equivalent headcount |
| Adjusted gross income | A personal tax term. Unrelated to agency reporting |
Frequently asked questions
What is agency gross income (AGI)?+
Agency gross income is gross billings less the third-party costs an agency recovers at cost, such as media budgets, print, and rebilled contractor fees. What remains is the income the agency earned for its own work. It is the same figure as net revenue.
Is agency AGI the same as adjusted gross income?+
No. Adjusted gross income is a personal tax concept used on individual tax returns. Agency gross income is a business reporting measure equal to billings less pass-through costs. The two share an abbreviation and nothing else.
Why do agencies report AGI instead of billings?+
Billings measure how much money moved, not how much the agency earned. A shop placing $3m of media for $450,000 in fees is a $450,000 business. Reporting billings produces margins that look catastrophic and makes agencies with different media mixes impossible to compare.
How do you calculate AGI per FTE?+
Divide agency gross income by full-time-equivalent headcount. Count part-timers as their fraction, include long-term contractors embedded in delivery, and include the founder even when they also handle admin. Excluding people flatters the number without changing the underlying position.
Is AGI the same as net revenue?+
Yes. The two names describe the same figure: billings less pass-through costs. Agency gross income is the more common term in agency-specific benchmarking, and net revenue is the more common term in general accounting.
Does marked-up media count as pass-through?+
Only the cost portion. If you buy media at $100,000 and rebill it at $115,000, the $100,000 passes through and the $15,000 markup is your income and belongs in AGI. Treating the whole rebilled amount as pass-through understates what the agency earned.
Related calculators & guides
Work the same numbers from the next angle.
AGI per FTE Calculator
Benchmark agency gross income per full-time employee against healthy bands — the core productivity metric.
Open toolWhat Are Pass-Through Costs?
Third-party spend billed at cost. Why it leaves revenue before margin is measured, and the cash risk it carries.
Open toolRevenue per Employee Calculator
Benchmark revenue per head and test whether a new hire is accretive or dilutive before you make it.
Open toolGross 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.
Open toolAgency Target & Net Multiplier
What target multiplier and net multiplier mean, and the benchmark range for agencies.
Open toolWhat 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.
Open toolKeep the earned income separate from the money passing through.
Ascend keeps project costs and billable hours on the same record, so fees and rebilled spend stay separable when the invoice is generated. The free tier covers one client end to end.
Start with Ascend free