forge
agency benchmarks report2026 edition

The agency benchmarks report

30+ benchmarks across margin, growth, utilization, revenue per employee, client retention and pricing mix - every number sourced from public agency-finance research, not vibes. Use them to sanity-check your own numbers, then run them through the pricing calculator to see where you land.

10 sections · 9 sources · updated 2026-06-09
13%Average agency net profit margin2025, after-taxsource →
7.5%Average agency revenue growth2025, rebounded from 5% in 2024source →
18% vs 42%Annual client churn: retainer vs projectRetainer shops churn 2.3× lesssource →
$163KAverage revenue per FTEMarketing agencies, 2025source →
39%UK £1M+ agency gross margin (median)A record low - 2024source →
78%Of digital agencies use retainersUp from 64% in 2023source →
65-80%Healthy billable utilizationDelivery roles - above 85% is burnout territorysource →
~43%Of B2B agency churn happens in the first 90 daysOnboarding is the most under-rated retention leversource →
30% vs 10%Net margin: agencies that reduced services vs expandedFocus beats breadth - 3× the marginsource →
19% vs 8%Net margin: 0-9 person studios vs 50+ agenciesSmaller often retains more profit per dollarsource →
key findings

The story in five lines

  1. Agency net margins are quietly compressing - the industry average held at 13% in 2025, down from a long-run 15%, with growth at 7.5% rebounding from a weak 2024.
  2. Smaller is more profitable. Studios under 10 people run 19% net margin; agencies with 50+ people average just 8% - the inverse of what most owners assume.
  3. Retainer agencies retain dramatically better than project shops - 18% annual churn against 42% - and the gap widens as agencies grow. Retainers are now used by 78% of digital agencies, up from 64% in 2023.
  4. Revenue per employee is the under-watched profitability signal: healthy marketing agencies sit at $150-200K; specialists hit $250K+. Below $120K, the math doesn't work.
  5. The single biggest gross-margin lever is scope discipline: UK agency gross margin has dropped to a record-low 39% median, with only ~24% of agencies hitting the 50% healthy target.

Gross (delivery) margin

What's left of the fee after the direct cost of delivering the work - the number the pricing calculator shows. This is the lever you control on every engagement.

Healthy target (on your P&L)50-60%+Parakeeto's benchmark for a well-run agency
Strong, per individual project70%+
UK £1M+ agency median (2024)39%a record low - via The Wow Company BenchPress
Share of UK agencies hitting ~50%24%

Source: Parakeeto - Digital Marketing Agency Profit Margin

Net (after-tax) profit margin

What the agency actually keeps after every cost - delivery, overhead, sales and admin. Much lower than gross margin, and the figure most owners quietly over-estimate.

Industry average (2025)13%down from 14% in 2024; ~15% long-run since 2015
Healthy for most agencies15-20%
High performers25-30%
Average project margin35%among the 59% of agencies that track it

Source: Promethean Research - How Profitable Are Digital Agencies? (2025)

Net margin by agency type

Net (after-tax) margin varies a lot by what you do. Promethean Research's 2025 cut, by primary discipline:

Design18%highest - avg revenue ~$1.77M
Marketing13%
Blended / full-service13%
Development11%lowest, despite the highest avg revenue (~$9.1M)

Source: Promethean Research - How Profitable Are Digital Agencies? (2025)

Net margin by agency size

Smaller, founder-led studios run leaner and keep more. Net margin by headcount (Promethean Research, 2025):

Studio (0-9 people)19%
Small (10-24)12%
Medium (25-49)9%
Large (50+)8%

Source: Promethean Research - How Profitable Are Digital Agencies? (2025)

Billable utilization

The share of paid hours that are billable. Too low and you're carrying slack; push past ~85% and burnout and overtime start eating the margin back.

Healthy whole-agency range65-80%
Designers & developers75-85%
Project managers60-70%
Account & strategy50-60%
Leadership30-50%

Source: TMetric - Marketing Agency Benchmarks 2025

Hourly & effective rates

What agencies charge per hour - though most have moved to retainers and project pricing, where the effective rate is what really matters.

Worldwide average rate~$138/hr
Common range$150-$224/hr~65% of agencies that bill hourly sit here
Agencies that don't bill hourly at all~50%

Source: Credo - Digital Marketing Agency Hourly Rates

Revenue growth

Industry-wide growth has rebounded from a soft 2024 but remains below the long-run trend. The spread between fast and slow movers is the real story.

Industry average growth (2025)7.5%up from 5% in 2024; below long-run trend
Fast-growing agencies (top quartile)+34%
Slow / declining agencies (bottom quartile)-15%
Agencies that reduced services (net margin)30%fastest growth + highest margin
Agencies that expanded services (net margin)10%focus beats breadth

Source: Promethean Research - 2026 State of Digital Services

Revenue per employee

The under-watched profitability signal - revenue divided by headcount, including the founders. Below the floor, no pricing fix saves the math; above the target, every other metric tends to follow.

Healthy working range$150K-$200K
Marketing agency average (2025)$163K
Generalist agency target$180K+
Specialist / top-performer target$250K+
US agencies (broad average)~$220K
Risk threshold< $120Kminimal profit room after payroll

Source: Learn to Scale - Revenue Per Employee for Marketing Agencies

Client retention & churn

Retention varies dramatically by business model and agency size. Retainer agencies retain 2.3× better than project shops, and the gap widens as agencies grow.

Retainer agencies - annual churn18%56-month average client lifespan
Project-based agencies - annual churn42%24-month average client lifespan
Hybrid model - annual churn28%
Agencies with 51+ employees - annual churn15%
Agencies with 1-10 employees - annual churn32%
Top-performing retainer shops - annual churn8-10%
Share of B2B churn in the first 90 days~43%onboarding window is critical

Source: Focus Digital - Average Marketing Agency Churn (2026 Report)

Pricing model mix

How agencies actually charge - in 2026, retainers dominate, hybrids are growing, and pure hourly is in decline. Most agencies run more than one model at once.

Digital agencies using retainers (primary model)78%up from 64% in 2023
Agencies using retainers as at least part of mix~90%
Agencies using fixed-fee pricing72%via the 4A's 2024 Compensation Survey
Top agencies using retainer + performance bonus28%
Agencies that don't bill hourly at all~50%

Source: Predictable Profits - 2025 Agency Growth Benchmark (300+ 7-8 figure agencies)

read this first

Gross margin is not net margin

The single most common mistake: confusing the two. Gross (delivery) margin is what's left of the fee after the direct cost of doing the work - that's the ~50% target, and what our calculators show. Net margin is what's left after everything else too - overhead, sales, admin, tax - and it averages just ~13%. A 50% gross margin and a 13% net margin can be the same healthy agency.

put it to work

Check your own numbers

Agency pricing & margin calculator

Find your real gross margin and effective hourly rate on any retainer or project - or work backwards from a target margin to the fee you should charge.

open calculator →

Effective hourly rate calculator

Turn any fixed fee into the real hourly rate you're earning, across projects and retainers.

open calculator →

Agency project quote calculator

Size a one-off project price from scope, hours and the margin you want to hit.

open calculator →

Markup vs margin calculator

Convert a markup into the margin it really gives you (and back), with the price and profit behind it.

open calculator →

Agency benchmark calculator

Score your margin, utilization and revenue per person against real agency benchmarks - see exactly where you stand.

open calculator →

Raise your rates calculator

Model a price increase: see your new revenue and how many clients you could lose and still come out ahead.

open calculator →

Agency rate card builder

Enter your team's costs, target margin and utilization to build a defensible rate card per role.

open calculator →

Client profitability calculator

See gross margin, profit and effective hourly rate per client - spot loss-makers before renewal.

open calculator →

Churn rate calculator

Work out your client or revenue churn rate for any period - and see what it's costing you in lifetime value.

open calculator →

Client retention calculator

Work out the share of clients you keep over a period - the flip side of churn.

open calculator →

MRR calculator

Add up the monthly recurring revenue from your retainers in seconds.

open calculator →

ARR calculator

Turn your monthly recurring revenue into an annual run-rate figure.

open calculator →

LTV calculator

Estimate how much a client is worth over the whole relationship.

open calculator →

CAC calculator

Work out what it really costs you to win a new client.

open calculator →

Net revenue retention calculator

See whether your existing client base grows on its own, after expansion and churn.

open calculator →

Gross margin calculator

See the real gross margin on a project or retainer after delivery costs.

open calculator →

Net profit margin calculator

See what's left as profit after all delivery and overhead costs.

open calculator →

Break-even calculator

Find the revenue you need to cover your fixed costs.

open calculator →

Utilisation rate calculator

Find the share of your team's available hours that are actually billable.

open calculator →

Realization rate calculator

Find out how much of the time you work actually gets billed.

open calculator →

Blended rate calculator

Turn your team mix and cost into a single blended hourly rate to quote from.

open calculator →

Win rate calculator

Calculate the share of proposals or opportunities you convert.

open calculator →

NPS calculator

Turn promoter and detractor counts into your net promoter score.

open calculator →

Revenue run rate calculator

Project a period's revenue into an annualised run rate.

open calculator →

ARPA calculator

Work out your average revenue per account or client.

open calculator →

FTE calculator

Convert any mix of hours into full-time-equivalent headcount.

open calculator →

Revenue per employee calculator

See how much revenue each full-time-equivalent on your team generates.

open calculator →
methodology

Sources

Every figure on this page comes from a named, public agency-finance source. We aggregate; we don't invent. Refreshed 2026-06-09.

use this report

How to cite this report

Quoting a stat from this page in your own post or report? Use this citation - and a link back is appreciated.

Forge (2026). Agency Benchmarks Report 2026 edition. Retrieved from https://forge.so/agency-benchmarks

Plain-text link: https://forge.so/agency-benchmarks

Or embed a stat live. Each of the six headline stats above has a one-click iframe embed - sourced, always-current, and it links back to this report automatically. Click “embed this stat” on any card up top.

build. publish. prove.

See your margin live, per client.

Forge builds branded time-tracking and client portals for your agency - so you track these numbers without spreadsheets.

build my tools all calculators