How PR agencies can assess which clients deliver best long-term profit

Key takeaways

• Not all revenue is equal. A high-retainer client can be your least profitable if they consume excessive team time through constant calls and revisions.
• Track real account margin, not just invoice value. You need to measure the actual cost of delivering the service, including all team hours, freelance spend, and overheads.
• Use client segmentation to guide strategy. Categorise clients by profitability and strategic value to decide where to invest resources and which relationships to reshape.
• Profitability analysis informs pricing and scoping. Data from past clients shows you where to adjust future proposals, raise rates, or tighten contracts to protect your margins.
• This is an ongoing process, not a one-off. Regular review stops small profit leaks from becoming major issues and helps you build a portfolio of ideal clients.

For PR agency owners, revenue often feels like the ultimate scorecard. A full client roster and a healthy bank balance seem to signal success. But this view misses a crucial detail. Not every pound of revenue contributes equally to your bottom line.

Some clients, despite their impressive monthly retainer, quietly drain your profitability. They demand endless calls, request revisions outside the agreed scope, and tie up your best people with administrative tasks. Others, who may pay less, are efficient, collaborative, and deliver strong results with minimal fuss. They are your profit engines.

PR agency client profitability analysis is the process of uncovering this truth. It moves you from guessing which clients are good for business to knowing with data. This isn't about being ruthless. It's about being smart with your most finite resources: your team's time and your agency's energy.

In our work with PR agencies, we see a common pattern. The agencies that grow sustainably aren't just winning more clients. They are deliberately cultivating a client portfolio where profitability and strategic value align. They use analysis to make informed choices about where to invest and where to set boundaries.

This guide will walk you through how to do that. We'll cover the metrics that matter, how to segment your clients, and how to turn insights into action that boosts your long-term profit.

What is PR agency client profitability analysis and why does it matter?

PR agency client profitability analysis is the practice of measuring the true profit each client generates after accounting for all the costs of serving them. It matters because it shifts your focus from top-line revenue to bottom-line health, ensuring you're building a sustainable business, not just a busy one.

At its core, this analysis answers a simple question: "Is this client worth what they cost us?" The cost isn't just the direct freelance spend or media spend you pass through. It's the total cost, most importantly the time of your salaried team.

Think of it this way. Your agency's capacity is a pie. Each client gets a slice. Profitability analysis tells you which clients give you a generous portion of the pie in return, and which ones take a huge slice but only give you crumbs back.

Without this analysis, you're flying blind. You might celebrate landing a big-name client on a £10,000 monthly retainer. But if serving them requires two senior account directors and a constant stream of junior support, your actual profit could be minimal or even negative. That's capacity you can't use to serve more profitable clients or win new business.

This process matters for long-term strategy. It helps you identify clients who are strategic partners versus those who are transactional drains. It provides the data you need to have confident conversations about scope, pricing, and ways of working. For specialist support in implementing this, working with accountants for PR agencies can provide the framework and clarity you need.

How do you track real profitability for a PR client?

You track real profitability by calculating the account margin for each client. This means subtracting all direct costs of service delivery from the revenue they generate. The key is capturing every cost, especially your team's time, which is often the biggest hidden expense.

Start with the basic formula: Client Revenue minus Direct Costs equals Gross Profit. Then, express that as a percentage of revenue to get the account margin. For example, a client paying £5,000 a month with direct costs of £2,000 has a gross profit of £3,000 and an account margin of 60%.

The challenge for PR agencies is accurately capturing those direct costs. They typically include three things. First, team labour cost. This is the salary cost of the time your team spends on the account. You need a time-tracking system to know how many hours go to each client.

Second, freelance or contractor costs. This includes payments to journalists, designers, videographers, or any external specialist hired for the client's work. Third, direct pass-through costs. This might be media monitoring subscriptions, event costs, or premium press release distribution fees that you invoice back to the client.

Accurate account margin tracking relies on good time tracking. Don't guess. Use a simple tool where your team can log time against clients and tasks. Review this data monthly. You'll quickly see which clients are consuming disproportionate hours compared to their fee.

This data is powerful. It shows you the difference between a client's theoretical profitability (based on your initial estimate) and their actual profitability. This gap is where you find opportunities to improve your processes, adjust scopes, or renegotiate fees.

What are the most common mistakes PR agencies make when assessing client value?

The most common mistake is focusing solely on retainer size or brand prestige instead of actual profit margin. Agencies often over-serve prestigious clients, under-price complex work, and fail to account for the hidden cost of difficult client relationships.

Many PR agencies fall into the "brand name trap." They accept lower margins from a high-profile client because of the perceived prestige and case study value. While strategic value is important, it must be balanced. A prestigious client that operates at a loss for years is subsidised by your other, more profitable clients. That's not a sustainable strategy.

Another major error is poor scope definition and management. PR work can be nebulous. Without clear boundaries in your contract or statement of work, "a few press releases" can turn into endless drafting, stakeholder approvals, and media chasing. This scope creep silently erodes your margin. You deliver the extra work because you want to be helpful, but you never bill for it.

Agencies also frequently misjudge the cost of client management. A client who needs daily reassurance, has slow decision-making cycles, or constantly changes direction adds massive hidden costs. Their "high maintenance" behaviour burns through account team hours that aren't captured in the original project plan.

Finally, many agencies don't do the analysis at all. They run their business on gut feel and bank balance. This works until it doesn't. When you hit a capacity wall or need to invest in growth, you lack the data to make smart choices about which clients to focus on or which services are most profitable.

How can client segmentation improve your agency's strategy?

Client segmentation groups your clients by profitability and strategic value, creating a clear map for where to focus your energy. It turns raw profit data into an actionable strategy, guiding everything from service delivery to business development.

Effective client segmentation typically uses a simple two-by-two grid. One axis is profitability (high or low). The other axis is strategic value (high or low). Strategic value includes factors like case study potential, industry prestige, referral likelihood, and how much you enjoy working with them.

This creates four clear categories. First, Stars: High profit, high strategic value. These are your ideal clients. Nurture them, look for more work, and use them as references. Second, Workhorses: High profit, lower strategic value. They pay the bills reliably. Deliver efficiently but don't over-invest in growing the relationship.

Third, Question Marks: Low profit, high strategic value. This is your challenge zone. These clients have potential but are currently unprofitable. You need a plan to move them into the "Stars" category by adjusting scope, raising fees, or improving efficiency. Fourth, Sinkholes: Low profit, low strategic value. These clients drain resources. The strategy here is to reshape the relationship quickly or exit gracefully.

This framework enables intelligent strategic resource allocation. You know to put your best account leads on "Star" clients. You can automate or streamline service for "Workhorse" clients. You schedule focused interventions for "Question Mark" clients. This ensures your team's talent is applied where it will have the greatest impact on agency health and growth.

Segmentation also informs your new business efforts. By understanding the profile of your "Stars," you can target similar companies in your marketing and pitches. You stop chasing any client with a budget and start pursuing the right clients for your profitable model.

What key metrics should you track for each client?

Track these core metrics for each client: account margin percentage, effective hourly rate, utilisation rate against the account, and client lifetime value. Together, they give a complete picture of financial health and efficiency.

The account margin percentage is your primary health indicator. Aim for a clear benchmark. For PR agencies, a good target for account margin is typically 50-60% or higher. This leaves enough to cover your overheads (rent, software, management) and deliver a healthy net profit.

Calculate the effective hourly rate. Take the client's monthly fee and divide it by the total number of hours your team spends on them. If a £5,000 retainer takes 50 hours to deliver, your effective rate is £100 per hour. Compare this to your target billing rate for each team member's level. If your target for a senior account manager is £150 per hour, this client is dragging your average down.

Track utilisation against the account. This shows if the client is using the amount of time you budgeted for them. If you sold a retainer based on 30 hours per month but they consistently use 45 hours, your margin is being compressed. This is a direct signal for a scope conversation.

Consider client lifetime value (LTV). How long do they stay with you, and what is the total profit over that relationship? A client with a slightly lower margin but who stays for five years may be more valuable than a high-margin client who leaves after six months. Factor in the cost of replacing them.

Don't just track these in a spreadsheet. Create a simple dashboard, perhaps in your accounting software or a tool like Google Sheets, that gives you a monthly snapshot. Seeing the metrics side-by-side for all clients makes patterns and outliers obvious. This is where account margin tracking moves from data collection to strategic insight.

How do you use profitability data to make better business decisions?

Use profitability data to guide pricing, scope design, client management, and even which services you offer. It turns financial history into a strategic tool for shaping a more profitable future.

Your historical data is a goldmine for pricing new business. Look at your most profitable clients. What services did you provide? What was the scope structure? What was their industry? Use this profile as a template for future proposals. Conversely, analyse your least profitable clients. Identify the common pitfalls—was it unrealistic deliverables, a difficult stakeholder, or an underestimation of hours? Build safeguards against these in your next contracts.

Data informs proactive client conversations. Instead of feeling resentful about an over-serviced account, use the numbers. You can say, "Our analysis shows we're consistently delivering 40 hours of work against the 25-hour retainer. To maintain the quality you expect, we need to discuss adjusting the scope or the investment." This is a professional, fact-based discussion, not an emotional complaint.

Profitability analysis should directly influence your service model. You might discover that media training workshops have exceptionally high margins, while ongoing press office support is thinner. This could lead you to package services differently or invest in training to make the lower-margin work more efficient.

Ultimately, this data empowers strategic resource allocation at the highest level. It helps you decide where to hire next. If your most profitable accounts are straining your senior team, it might be time to hire a mid-level account manager to free them up. You're investing based on evidence, not guesswork.

To get a clearer picture of how your client portfolio affects profitability, take our free Agency Profit Score — a quick 5-minute assessment that reveals your financial health across profit visibility, revenue pipeline, cash flow, operations, and AI readiness.

When should you consider reshaping or ending a client relationship?

Consider reshaping a relationship when the account margin is consistently below your target, the client is negatively impacting team morale, or the strategic value has evaporated. Ending it is the last resort, but sometimes necessary for the health of your business.

Reshaping is the first step. This means having a frank conversation to reset expectations. The goal is to move the client into a profitable and sustainable model. Common reshaping tactics include renegotiating the fee to reflect the actual work, formally re-scoping the contract to exclude draining activities, or changing the service model (e.g., moving from unlimited support to a fixed number of hours or projects).

Use your profitability data as the foundation for this talk. It's not personal; it's business. You're showing that the current arrangement isn't sustainable for delivering high-quality work long-term. Many reasonable clients will understand and work with you to find a better solution.

Consider ending the relationship if reshaping fails. Clear signs include: the client refuses to acknowledge the value/cost mismatch, they are consistently abusive or disrespectful to your team, or they are a perpetual "Sinkhole" (low profit, low value) that takes time away from better opportunities.

Exiting a client is a business decision, not a failure. It frees up capacity—your most valuable asset—to serve better clients or win new ones. Calculate the opportunity cost. The hours spent managing one difficult, low-profit client could be used to service two profitable ones or to pitch for a dream account.

Always have a transition plan. Be professional, fulfil your contractual obligations, and provide a reasonable notice period. How you end a relationship affects your reputation. The goal is to part ways amicably, leaving the door open for a different type of engagement in the future.

How can you build a more profitable client portfolio over time?

Build a more profitable portfolio by using insights from current analysis to inform who you pitch, how you price, and how you structure engagements. Systematically replace low-value work with higher-value clients that fit your ideal profile.

Start with your ideal client profile (ICP). Based on your analysis of "Star" clients, define what makes them great. Is it their industry, company size, marketing budget, internal team structure, or attitude? Use this ICP as a filter for all new business activity. Say no to opportunities that don't fit, even if they have a budget. This discipline is hard but transformative.

Price for profit from the start. Don't just guess or compete on price. Use your known costs and target margins to build proposals. If a project requires 100 hours and your target blended rate is £120 per hour, your fee should be at least £12,000. Stick to your numbers. Competing on price attracts clients who value cost over value, which is a race to the bottom.

Implement rigorous scope management from day one. Use detailed statements of work that clearly outline what is and isn't included. Set expectations about revision rounds, meeting schedules, and communication protocols. This prevents the slow creep that destroys margins.

Regularly review your entire portfolio. Conduct a formal PR agency client profitability analysis at least twice a year. This isn't a one-and-done exercise. As your agency grows and changes, so will your client relationships and cost base. Regular reviews catch small issues before they become big problems.

Invest in team efficiency. The less time it takes to deliver great results, the higher your margins. This could mean better project management tools, training on software, or creating templates for common tasks like press releases or reports. Wondering how operational improvements stack up against your current setup? Our Agency Profit Score benchmarks your operations and shows where efficiency gains could boost your margins.

By making these practices habitual, you gradually shift your client mix. You'll find yourself with more collaborative, value-aligned clients who appreciate your work and pay you fairly for it. That's the foundation for a truly profitable and sustainable PR agency.