Most agencies can tell you revenue per account instantly and margin per account not at all. That is the wrong way round, because revenue tells you how big an account is and margin tells you whether you should want another one like it.
Why Revenue Per Account Misleads
Two accounts both billing $6,000 a month are not the same account. One consumes 20 delivery hours, the other consumes 55 because the client changes direction weekly and nobody wrote it into scope. On revenue they are identical. On margin one is a good business and the other is a slow leak.
Agencies that only watch revenue grow into their worst accounts, because the loudest clients are usually the ones absorbing the most unbilled time.
The Calculation
Gross margin per account is revenue minus direct delivery cost, divided by revenue. Direct delivery cost means the fully loaded cost of the people doing the work, multiplied by the hours they actually spent, plus any pass-through tools billed against that account.
Two rules make it honest. Use loaded cost, not salary, which is typically 1.25 to 1.4 times base. And use actual hours, not planned hours. If you are not tracking time at all, start there, because everything after this is guesswork.
Exclude sales, admin, and rent. Those belong in net margin. Mixing them in hides which accounts are structurally unprofitable.
A Worked Example
An account bills $6,000 a month. A specialist at $110,000 base is roughly $137,500 loaded, which across about 1,800 productive hours a year is $76 an hour.
At 20 hours a month that account costs $1,520 to deliver. Gross margin is $4,480, or 75 percent. That is a healthy account.
At 45 hours a month it costs $3,420. Margin drops to $2,580, or 43 percent. Same revenue, and now you are running a delivery operation for slightly more than the cost of running it.
At 60 hours it costs $4,560 and margin is 24 percent, which will not survive one bad month or one team member leaving.
The lesson is that the difference between a good account and a bad one is usually 25 hours a month that nobody is measuring.
The Three Margin Killers
Scope creep nobody logged. Not the big requests, which get quoted. The small ones, which get absorbed because saying no feels disproportionate. Twenty of those a quarter is a person-week.
Seniority mismatch. Senior people doing work that a mid-level person could do. This is the most common one and it hides well, because the work is excellent and the client is happy. It is still margin you are giving away.
Rework. Every round of revisions past the second is margin. Rework almost always traces back to a brief that was incomplete, not to execution that was poor.
What Actually Fixes It
Track hours by account for one quarter, even roughly. Most agencies discover their margin spread across accounts is wider than they expected, and that the worst account is one they thought was fine.
Then move the repeatable execution to the lowest appropriate cost of delivery, whether that is a junior hire, a documented process, or an external pod. The point is not cheaper people. It is that senior time stops being spent on work that does not require seniority.
And reprice or exit the accounts that stay below 40 percent after you have fixed delivery. If an account is structurally unprofitable at your rates, more volume of it makes the problem larger, not smaller.
Part of: The GCC Model for Marketing Agencies, covering how agencies get offshore economics without building a center.