The decisive factors for profitable agencies
Realistic daily rates
There are a lot of articles about agency hourly rates, but most agency entrepreneurs still wonder what daily rate they need to set in order to make a reasonable profit.
The biggest
margin stoppers
The labor costs of employees do not usually play a decisive role. Here is an example:
An employee with a weekly working time of 40 hours, 30 vacation days and 6 sick days, earns 3,500.00 euros gross and thus incurs costs of 29.91 euros per hour for the agency. With a gross salary of 5,500.00 euros, the costs amount to 45.73 euros per hour or 365.84 euros per day. Overtime not included.
OS/ calculates the True Labor Costs™ for each employee exactly and also gives you the average costs for each of your agency services, including benchmarking.
The decisive factor for the agency margin is the overhead. This rarely consists of exorbitant office costs or an exclusive fleet of vehicles, but rather the proportion of labor costs that you cannot pass on to your customers.
Accordingly, agencies often destroy their margins with:
- Trying to cover the rising costs of internal projects.
- Trying to deliver projects that go beyond the scope sold.
- Trying to maintain underutilized resources that are not covered by sales.
Of course, all three cannot be completely avoided, but they can be easily controlled. OS/ offers you a variety of tools and options for this.
OS/ Tools and
possibilities
In OS/ everything is a project
In the OS/ agency software, everything is viewed as a project, including internal projects and pitches. This allows you to track your investments for new business or the costs of internal meetings down to the cent.
The OS/ Time Invest Report
With OS/ you can not only evaluate time recording in various dimensions such as client, project or area of expertise, but also conveniently differentiate whether the time was spent on client projects (“client facing”) or internal tasks.
The OS/ Overhead Cost Factor
With the Overhead Cost Factor (OCF™), you can link overhead costs with the project return, giving you precise insights into success. Despite numerous projects, you can maintain an overview and manage overall performance. OS/ allows you to evaluate each project in the context of your goals to ensure control.
All about the Overhead Cost Factor (OCF™)
Expected™ in project controlling
In project controlling, you can see immediately whether a project will exceed the expected costs or is already doing so. This allows you to make adjustments at an early stage or renegotiate the additional costs with your customer.
Summary
By managing your overhead costs effectively, you can achieve good profits even with tightly negotiated daily rates, without getting caught up in time-consuming discussions or financial uncertainties.
Interested in learning more about how OS/ can help you control your labor costs, day rates, benchmarking and overhead? We look forward to hearing from you!
Find out how OS/ can contribute to your success and arrange a personal consultation now.
Book your OS/Expert appointment now. Our experts will give you a personal overview of relevant functions, answer all your questions and set up an individual test account for your business.