Definition: Delivery Margin measures the profit generated from the sales of services after deducting the cost of producing or providing them. It is calculated by subtracting Delivery Expenses incurred from the Agency Gross Income (AGI) generated in a given period of time and dividing the result by the AGI. The Delivery Margin percentage represents the portion of each dollar of revenue that remains after deducting Delivery Expenses.
Supporting Definitions:
Formula: Delivery Margin = (AGI - Delivery Expenses) / AGI
Benchmarks: Delivery Margin agency wide would be considered healthy as long as it’s over 50%. We’d classify anything from 50 to 60% as ‘healthy’. If we’re looking at it from the per-project scope, it’s more like 10-20% higher than the agency wide scope to be considered “healthy”.
The agency wide target is lower, because it takes into account gaps in utilization, time off, holidays, turnover/training, etc. It also includes **Shared Delivery Expenses** which would be expenses related to delivery that can’t be attributed to one particular project, rather, delivery as a whole. If you were a design firm, that might be things like design software, stock footage libraries, shared hosting, etc.
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