Field Notes
Essays from inside a 120-person digital agency on Jira — written by Ernest. Project margin, estimating, the architecture of profitability, and the small decisions that compound. No content marketing.
Overhead is the cost line most agencies never allocate to projects at all — which is how a book of 50% projects produces an 8% year. The pro-rata method, the minimum-revenue floor that stops slow months distorting it, and a worked example of one project in a strong month and a weak one.
Scope creep runs at 5–12% of contract value on friendly projects — which sounds survivable until you notice it comes straight out of margin, not revenue. On a 25%-margin project, a 10% creep takes nearly half the profit. Where it hides, a worked example, and how to count it.
Salary divided by 2,080 is not what an employee costs you per hour — the real figure is often 60–80% higher once employer taxes, pension, per-head costs and paid non-working days are counted. A step-by-step calculation with a worked example for a £55,000 developer.
On a real-margin basis — labour at true cost, overhead allocated, unbilled scope counted — a healthy agency project lands around 20–30%. Most agencies quoting 50–60% are quoting labour margin, a different number. The honest benchmark ranges, and why the popular ones mislead.
Project margin, gross margin and EBITDA answer three different questions for three different audiences. This is how the three agency profitability metrics connect, where the common confusions lose money, and a worked bridge from one engagement up to agency EBITDA.
Support retainers are priced once at sale and almost never re-costed, so they drift into loss through SLA creep, senior time at junior rates, and unlogged comms. How to measure real support retainer profitability and what to do about it.
How role-rate variance silently erodes agency margin when senior staff absorb work below their cost line. Worked tables of role rate × employee cost across four common scenarios, with the conditional logic that should drive who works on what.
15 minutes on your real Jira, our screen.
Book a demoA definitional piece for finance directors and agency owners. Project margin is not invoice value minus labour cost. It is the share of project revenue left after labour at real cost, allocated overhead, and any unbilled scope. Worked example, common mistakes, and the formula that survives audit.
Marketplace financial plugins do cost rates, billing rates and project budgets. They do not do pre-sold contract tracking, overhead allocation, three project types, role-mismatch attribution or a manager view. Each missing category maps to a specific recurring margin leak.