How Time Tracking Transforms Agency Profitability
For many agency owners, the struggle with profitability isn’t about a lack of clients—it’s about how team time is being spent. Without accurate data, it’s easy to fall into patterns of over-servicing clients, underpricing work, and misallocating resources.
The following case studies highlight real agency challenges and how time tracking provided the insights needed to make profitable, strategic decisions.
The Agency That Thought They Needed to Hire
An agency owner was convinced their team was stretched too thin. Client deadlines were slipping, workloads felt overwhelming, and the logical solution seemed to be hiring more people. Before making the investment, they turned to us for a second opinion.
We analyzed their time tracking data and found a surprising insight: only 50% of their team’s logged hours were billable. The rest was being spent on internal meetings, administrative tasks, and inefficiencies in project execution. Hiring more employees would have only increased costs without fixing the root issue.
Instead, we helped the agency:
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Restructure internal workflows to eliminate unnecessary meetings and optimize productivity.
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Implement a utilization tracking system to ensure team members spent at least 75-80% of their time on billable work.
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Adjust project timelines and expectations to improve efficiency.
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Train team leads to better allocate tasks, ensuring every role was aligned with revenue-generating activities.
The result? Without hiring a single additional employee, the agency increased its billable time from 50% to 80%, significantly improving profitability. They avoided an unnecessary payroll increase and instead maximized their existing resources.
The Project That Cost an Agency Money
An agency confidently scoped a project at $10,000, expecting a solid profit margin. However, as the project progressed, they started noticing an alarming trend—their costs were piling up far beyond expectations. By the time they completed the project, they had spent $14,000 in labor, tools, and resources, turning what should have been a win into a financial setback.
The root of the problem? Their initial scope and pricing strategy failed to account for actual resource allocation, scope creep, and underestimated labor hours. When they engaged us to analyze their pricing structure, we broke down their true cost per project, factoring in not just direct expenses but also hidden costs like revisions, project management, and unexpected delays.
Our approach included:
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Conducting a cost analysis to determine the actual expense of delivering projects.
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Implementing a pricing model that ensures profitability by setting a minimum margin threshold.
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Training the team on identifying and mitigating scope creep before it impacts profitability.
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Introducing a structured proposal process that aligns pricing with actual effort and value.
With these changes, the agency no longer prices projects based on gut feelings but on data-driven insights. Now, every project they take on is structured for profitability, ensuring they never lose money on a job again.
The Agency That Thought Their Bill Rate Was $125/hr
An agency was confident they were billing clients at $125 per hour. However, after reviewing their actual work hours against client retainers, they discovered a major issue—their effective billable rate was actually only $45 per hour, far below their target.
The cause? Untracked overages, excessive client revisions, and underestimated project scopes. Their team was working significantly more hours than accounted for in their pricing structure, eroding their profit margins.
We stepped in to help them:
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Implement a time tracking and reporting system to accurately measure hours worked per project.
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Adjust pricing structures to align with actual effort, ensuring minimum profit thresholds.
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Introduce scope control measures, including tighter contracts and controlled rounds of revisions.
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Educate their team on time accountability, ensuring all hours worked were properly allocated and billed.
With these changes, they gradually increased their true bill rate back to a profitable range. Now, instead of working extra hours for free, they price and scope projects correctly from the start, ensuring sustainable profitability.
The Retainer That Wasn't Profitable
An agency had several long-term retainer clients, providing a steady stream of revenue. However, after reviewing their financials, they realized that some retainers were consuming more resources than expected, effectively running at a loss. Their team was regularly exceeding the allocated hours, but because the retainer pricing was fixed, they weren’t being compensated for the extra work.
We stepped in to help them:
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Assess the profitability of each retainer by analyzing actual time spent versus revenue earned.
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Restructure retainers with clearer scope definitions and built-in limits to prevent overages.
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Introduce tracking systems to flag when projects were exceeding their allocated hours.
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Educate clients on the value of their services and implement rate adjustments where needed.
With these adjustments, the agency was able to turn unprofitable retainers into sustainable revenue streams. They now ensure that every ongoing client relationship supports their bottom line rather than draining resources.