Gross Margin (Delivery Margin)
Agency glossary · Updated July 2026
Definition
Gross margin, also called delivery margin, is the share of a project or client fee left after the direct cost of the people who delivered the work, measured against agency gross income and before overhead. It shows whether the work itself is profitable, separate from running the business.
(Agency gross income - direct delivery cost) / agency gross income x 100Why it matters
Delivery margin is arguably the single best predictor of whether an agency can fund its own growth. Healthy per-project margins pay for overhead, new business, and profit; thin ones mean every new client adds work without adding money.
Benchmark
Parakeeto recommends roughly 55% at the agency P&L level and about 70% per project, with 50 to 60% and 70%+ as healthy ranges. In practice this is a stretch, and many agencies sit below it.
Common mistake: measuring on the top-line fee instead of agency gross income, and never charging each project the real fully loaded cost of the hours delivered.
See it in AgencyKit
Frequently asked questions
A healthy agency gross (delivery) margin is about 50 to 60% at the P&L level and 70% or higher on individual projects (Parakeeto). It is measured against agency gross income, after pass-through costs, and before overhead.
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