Aug 5, 2026
Updated
Written by Gregory Shein, CEO & Founder
How to Track Agency Profitability by Client
Build a client-level review from checked project figures, account-service time and a stated overhead allocation. Keep the calculation separate from cash collection and native report totals.
A client with several active projects can be difficult to evaluate from invoice totals alone. One engagement may be efficient while another consumes unpaid revisions, coordination or support. A client-level review combines those pieces over one consistent period.
Corcava can supply project, time, rate, invoice and expense records. The client profitability calculation described here is a separately prepared review, not a native client P&L or an automatic ranking of profitable clients. Start with the worked project-profitability example, then use this method to roll up the inputs.
Choose a period and a revenue basis
Use a month, quarter or completed engagement period. Record which clients and projects belong in it, and use one currency or document the conversion method.
Choose the revenue measure before subtracting costs. These amounts answer different questions:
| Amount | What it can tell you | What it does not establish |
|---|---|---|
| Hours × bill rate | Rate-based value of recorded work | An invoice or a payment |
| Agreed fixed fee | Price of a defined scope | Revenue earned in this period or cash collected |
| Invoice total | Amount on a billing record | Payment received; a draft still needs review |
| Payment recorded | Payment entry associated with an invoice | The entire project's profitability |
| Accounting revenue | Revenue assigned under your accounting method | The timing of cash receipts |
For an actual client profit calculation, use revenue and costs assigned consistently to the same period. If you are evaluating a quote or an unfinished engagement, label the result a model or forecast. Do not mix a full project's fee with only one week's labor cost and call the result its final margin.
Roll up the projects first
List the client's projects and check their recorded hours, applicable cost rates and direct expenses. In Reports, a client filter or client grouping helps locate the relevant time. Inspect the underlying projects so unrelated work and missing assignments do not distort the review.
Reports' Total Spent values time at applicable cost rates. Billed amount values time at bill rates. The latter is not invoice revenue. Project Finances has another basis: linked client invoice totals minus linked team invoice totals and project expenses. It does not automatically subtract the report's time-based cost.
Do not simply add the projects' Finance totals. A shared client or team invoice appears in full in every linked project's ledger, so summing ledgers can duplicate revenue or labor cost. Reconcile unique invoice records and allocate shared amounts once in the client review. Apply your review-period rules separately; the Finance ledger is not filtered by the date range selected in Reports.
Keep a source column in your review:
| Review item | Source to check |
|---|---|
| Revenue or modeled work value | Accounting record, agreement, invoice or clearly labeled rate-based calculation |
| Delivery labor | Recorded project work and documented cost basis |
| Direct expenses | Project expense records |
| Account service | Client-related coordination and support not already included in delivery labor |
| Overhead | Separately maintained overhead pool and allocation method |
The Northstar delivery review in the project walkthrough shows why reconciliation matters: its Finance Total excludes the labor cost valued in Reports. The separate contribution calculation includes that cost and stops before overhead and tax. It is not Northstar's complete client P&L. Other Northstar projects, account work and allocated overhead would need their own checked records.
Include account-service work without counting it twice
Client calls, status preparation, support and revisions consume time even when they do not produce an additional invoice. Associate that work with the relevant client project where appropriate, and keep the descriptions useful enough to classify during the review.
Whether it is separately billable depends on the agreement. Fixed-price work can consume delivery effort without creating an additional hourly charge. Do not infer billability merely because a task concerns a client or has a bill-rate value.
If account-service hours are already included in the project's labor cost, keep them there. If you present them as a separate category, move the cost rather than subtracting it again. Apply the same rule to a team invoice that covers labor already included in a time-based model.
A consistent onboarding checklist, status report and client portal access review can help clarify how updates and decisions are handled. They do not guarantee a reduction in service time; measure the effect in your own records.
Allocate overhead explicitly
Overhead includes costs you have not already assigned directly: administration, shared software, insurance or office costs, for example. Check the cost-rate definition first. If it already includes an overhead allowance, allocating the same costs again overstates the client's cost.
Two possible allocation methods are:
- Revenue share: the client's share of the period's revenue multiplied by the overhead pool.
- Hours share: the client's share of recorded client-service and delivery hours multiplied by that pool.
Neither method identifies precisely which client caused each overhead cost. Choose a method that fits the review's purpose, record the assumptions and apply it consistently across all clients. Include all clients in the denominator so the allocation reconciles to the pool. A change in method should be visible when comparing periods.
The overhead-rate calculator can support planning; your actual allocation still needs a defined pool, period and denominator.
Calculate and review the result
Client contribution before overhead
= Period revenue − Delivery labor − Account-service labor − Direct expenses
Client result after allocated overhead
= Contribution before overhead − Allocated overhead
Margin percentage
= Result ÷ Period revenue × 100
Use the percentage only when revenue is positive. For zero-revenue periods, show the amounts and explain the timing rather than presenting a misleading percentage. For a modeled review, replace “revenue” with the actual named basis throughout the worksheet.
Review trends and causes before ranking clients. A low result may reflect work performed before a milestone invoice, a one-off onboarding cost, missing revenue, unpriced scope or genuinely expensive delivery. Agree an action that addresses that cause: correct a record, review the scope, revise the next quote or discuss a change. A universal percentage cutoff cannot make that decision for you.
Copyable monthly client review
Client and included projects:
Period and currency:
Revenue/model basis and source:
Delivery labor and rate basis:
Account-service labor not already counted:
Direct expenses not already counted:
Overhead pool and allocation method:
Result before and after overhead:
Unfinished work or missing records:
Invoice/payment review kept separately:
Action, owner and next review date:
For a recurring engagement, use the retainer profitability calculator to test a planning scenario. For team capacity, calculate billable utilization separately. The broader agency-profitability guide connects these reviews with scoping, delivery and invoicing.