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.
Your rate card is a list price, not a transaction price. The number that decides profit is the realised rate — revenue actually collected divided by hours actually delivered. A small discount and a modest overrun, together, can quietly halve your margin. The maths, a worked example, and what to track instead.
When AI-assisted development halves the hours to ship, hourly and time-and-materials pricing make the agency cannibalise its own revenue — the value held, the hours fell. The case for repricing on value, what happens to estimates and utilisation, and a worked example of a 200-hour build that now takes 90.
The contract model is a margin decision, not just a sales preference. Fixed-price concentrates estimate risk on the agency; time-and-materials shifts it to the client but caps upside. How real project margin behaves under each, when each protects margin, and the same build priced both ways.
Hourly rates are easy to compare, easy to negotiate, and structurally bad at telling you what to charge. Day rates, role rates, and value-based pricing each fix a different problem the hourly rate hides. The four cases for moving away from hourly billing, with the maths and the conversation that follows.
Why per-seat pricing on operations tools quietly punishes the agencies that use them best. A worked comparison across 50, 100 and 200 seats, and the structural reason flat-fee tools win on every horizon longer than a quarter.