Overhead
Agency glossary · Updated July 2026
Definition
Overhead is the ongoing cost of running an agency that is not tied to delivering a specific client’s work: rent, software, admin and non-billable staff, insurance, and the owner’s and managers’ non-delivery time. It sits between gross margin and net profit.
Why it matters
Delivery margin minus overhead is your net profit. Two agencies with the same delivery margin can have very different net margins if one carries bloated overhead. Watching overhead as a percentage of agency gross income keeps it in check.
Rule of thumb
If delivery margin is healthy (say 55%+) but net margin is thin, overhead is usually the leak. Look at tooling, non-billable headcount, and office costs first.
Related terms
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