Free STAOS Tool
Agency Markup, Margin & Effective Rate Calculator
Change any one field — cost, price, markup, or margin — and the others update live. Add hours worked to see your effective hourly rate. Built for agencies tired of guessing whether a project actually made money.
Estimate, not a quote. For planning only.
The benchmarks behind this
| Healthy agency gross margin (services) | 50–60%+ |
| Productized service gross margin | 60–75% |
| Pure media-pass-through margin | 15–25% |
| Markup formula | (Price − Cost) / Cost |
Sources: SaaS Capital / Promethean Research agency benchmarks. See STAOS benchmarks dataset.
Most agencies discover they're an underpriced consultancy wearing a media-buyer hat — margin is fine on paper, but effective hourly rate tells the truth. STAOS rebuilds the offer + close motion so you can charge what the work is worth.
Built by STAOS — sales coaching & fractional sales management for agencies.
01 How it works
Change one field, the rest follow.
Markup and margin are not the same number and confusing them is expensive. A 50% markup is a 33% margin. Agencies that quote from markup and budget from margin lose the difference every single engagement.
Cost to deliver — labour, tools and subcontractors — or the price you charge, or the markup, or the margin. Change any one of the four and the others recalculate live. You do not have to work in a fixed direction.
Enter hours worked on the engagement and you get effective hourly rate. This is the number that tells the truth. A project can show a healthy margin and still be a bad deal once you see what the team earned per hour delivering it.
Healthy agency gross margin on services runs 50 to 60% or better, productised services 60 to 75%, and pure media pass-through 15 to 25%. If you sit at the bottom of the band on work you thought was premium, the pricing conversation is overdue.
02 Questions
Markup, margin and the number that matters.
Markup is profit as a percentage of cost. Margin is profit as a percentage of price. A job costing $1,000 sold for $1,500 carries a 50% markup and a 33% margin — same money, very different-sounding numbers. Quoting on markup while planning on margin is how agencies end a profitable-looking year with no cash.
Fifty to sixty percent or better for services work, per the SaaS Capital and Promethean Research agency benchmarks. Productised services should reach 60 to 75% because delivery is repeatable. Pure media pass-through sits at 15 to 25% and should never be blended into the same average — doing so hides a service line that is barely paying for itself.
Because margin is silent about how long the work took. Two engagements at the same 50% margin can produce $250 an hour and $90 an hour, and only one of those is a business. Effective hourly rate is where scope creep shows up, and it is the number that tells you whether you are an agency or an underpriced consultancy.
Price equals cost divided by one minus the target margin. For 60% margin on $4,000 of cost: 4,000 ÷ 0.4 = $10,000. Do not add 60% to cost — that produces a 37.5% margin and is the single most common pricing error in the industry.
Yes, in cost of delivery. They are variable and they scale with the work. Where agencies go wrong is treating a subcontracted line as pass-through at zero markup because it felt awkward to mark up — you carry the risk and the management overhead, so it belongs in the priced work.
Utilisation or scope. Healthy margin on too little billable work will not cover fixed costs — that is the break-even calculator's question. And a margin calculated against the originally scoped hours means nothing if the job actually took twice as long. Put the real hours in and look at the effective rate.
Free 20 minute sales audit
The number is the easy part.
This tool tells you what is true today. The audit tells you which lever to pull, in what order.
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