What KPIs should a PR agency track to stay profitable?

Key takeaways

• Track gross margin, not just revenue. This shows the real profit left after paying your team and freelancers, which is the lifeblood of your PR agency.
• Measure your team's utilisation rate. Knowing what percentage of their paid time is billable to clients is the single biggest lever for improving profitability.
• Calculate revenue per employee. This is your ultimate efficiency scorecard, telling you if you're scaling effectively or just adding more people and costs.
• Monitor project margin tracking closely. Every press release, media pitch, and campaign should have its own profit target to avoid scope creep eating your fees.
• Use a simple dashboard. Pick 5-7 core PR agency profitability KPIs and review them weekly or monthly to spot trends before they become problems.

What are the most important PR agency profitability KPIs?

The most important PR agency profitability KPIs are gross margin, utilisation rate, and revenue per employee. These three numbers tell you if you're making money, if your team is working efficiently, and if you're scaling your business the right way. While revenue gets the headlines, these metrics show the underlying health of your agency.

Gross margin is the money left from your fees after you pay the direct costs of delivering the work. For a PR agency, this is mainly your team's salaries and any freelance costs. A healthy agency typically targets a gross margin of 50-60%. If your margin is lower, your pricing is too low or your costs are too high.

Utilisation rate measures what percentage of your team's paid time is billable to clients. If someone is paid for 40 hours a week but only 30 hours are client work, their utilisation is 75%. Most agencies aim for 70-80% utilisation. This is a key financial metric for agencies because it directly links your biggest cost (people) to your income.

Revenue per employee is your total revenue divided by your total headcount. It's a simple measure of efficiency. For a growing PR agency, you want this number to increase over time, not stay flat. If it drops when you hire, you're adding cost faster than you're adding value.

Why do most PR agencies get profitability tracking wrong?

Most PR agencies get profitability tracking wrong because they focus only on revenue and bank balance. They see money coming in and assume they're profitable. The real cost of delivering PR services – your team's time – is often hidden or not measured accurately. This leads to under-pricing and over-servicing clients.

A common mistake is not tracking time properly. If your team isn't logging their hours against specific clients and projects, you have no idea which accounts are profitable. You might have a big, flashy client that actually loses you money because the team spends unbilled hours on endless revisions and extra calls.

Another error is ignoring project margin tracking. You might know your overall agency margin, but not the margin on each individual media campaign or retainer. One poorly scoped project can wipe out the profit from three good ones. Without this detail, you can't fix what's broken.

Finally, many agencies don't connect their financial data to their operational data. Your profit and loss statement tells you what happened. Your KPIs on utilisation and project margins tell you why it happened. You need both to make smart decisions.

How do you calculate and track gross margin for a PR agency?

You calculate gross margin for a PR agency by subtracting your direct service costs from your revenue, then dividing that figure by your revenue. Direct costs are the salaries of your account team, any freelance copywriters or designers, and direct software costs for media databases or monitoring tools. The formula is: (Revenue - Direct Costs) / Revenue.

For example, if you bill a client £10,000 for a quarterly PR retainer and the team costs you £4,500 in salary and freelance fees to deliver it, your gross profit is £5,500. Your gross margin is 55% (£5,500 / £10,000). This is the profit available to pay for everything else – your office, management, and your own salary.

Track this monthly. Look at it for your agency as a whole, but also for each client and major project. You might find your retainer clients have a 60% margin, but your one-off project work sits at 40%. That insight helps you decide where to focus your business development efforts.

A specialist accountant for PR agencies can help you set up your chart of accounts to track these costs cleanly from the start. This makes calculating your margin simple and accurate every month.

What is a good utilisation rate for a PR agency team?

A good utilisation rate for a PR agency team is typically between 70% and 80%. This means for every 100 hours you pay someone for, 70 to 80 hours are billed to client work. The remaining 20-30 hours cover essential non-billable time like training, internal meetings, business development, and admin.

If your utilisation is consistently below 70%, your team has too much non-billable time or not enough client work. This crushes your gross margin because you're paying people who aren't generating income. If it's consistently above 80%, your team is likely overworked, quality may suffer, and burnout is a real risk.

Track this by person and by department. Your account executives might have 75% utilisation, but your creative director might only be 50% billable. That's normal for senior strategic roles. The key is to plan for it and ensure their higher day rate or value to multiple clients justifies the cost.

Improving utilisation is one of the fastest ways to boost profit without winning a single new client. Better project planning, clearer scopes of work, and reducing internal meeting time can all free up billable hours. This directly improves your key financial metrics for agencies.

How does revenue per employee impact PR agency growth?

Revenue per employee impacts PR agency growth by showing whether you're scaling efficiently or just getting bigger. It's calculated by dividing your total annual revenue by your total number of full-time equivalent employees. A rising number means you're generating more income per person, which is the hallmark of scalable, profitable growth.

Let's say your 5-person agency has revenue of £500,000. Your revenue per employee is £100,000. If you hire two more people and revenue only grows to £600,000, your revenue per employee drops to about £86,000. This suggests the new hires aren't yet contributing enough billable work or that your pricing hasn't adjusted for the increased capacity.

Use this KPI to guide hiring decisions. Before you hire, ask: "What specific client work or new business will this person handle, and how will it increase our total revenue?" Your goal should be to maintain or increase your revenue per employee over time. Industry benchmarks vary, but for established PR agencies, £100,000 to £150,000 per employee is a common target range.

This metric stops you from bloating your team with non-essential roles before you can afford them. It forces discipline and ensures that growth actually adds to your bottom line, not just your overhead.

Why is project margin tracking critical for PR agency profitability?

Project margin tracking is critical for PR agency profitability because it shows you exactly where you make and lose money. PR work is often delivered as retainers or campaigns with flexible scopes. Without tracking the margin on each piece of work, scope creep – those extra press releases, unexpected crisis comms, or endless media list tweaks – will silently destroy your profit.

For every client retainer or project, you should know three numbers: the fee you charge, the estimated cost of delivery (based on team time and freelance costs), and the actual cost. The difference between your estimate and the actual cost is your warning signal. If actual costs are consistently higher, your scoping is too optimistic or your team isn't tracking time properly.

Implement a simple process. When you win a new client or project, set a target margin in your project management or accounting software. As the team logs time, the system should show the live margin against that target. This lets account managers see in real-time if a project is going off-track financially.

This level of detail transforms client conversations. Instead of saying "we're doing too much extra work," you can say "the additional media outreach has taken 15 extra hours, which puts us 10% over our projected costs for this quarter." This factual approach is better for client relationships and protects your margins. For a deeper dive into operational efficiency, our report on AI's impact explores how technology can automate this tracking.

What other key financial metrics for agencies should PR firms monitor?

Beyond the core KPIs, PR firms should monitor client profitability, debtor days, and pipeline coverage. These metrics give you a complete picture of financial health and future stability. They help you manage cash flow, predict revenue, and ensure you're not reliant on a few troublesome clients.

Client profitability ranks your clients by their actual contribution to your bottom line. List all your clients by the gross profit they generate (their fee minus the direct cost to serve them). You'll often find the 80/20 rule applies: 20% of your clients generate 80% of your profit. Some clients may even be loss-makers when you account for all the unbilled time they consume.

Debtor days measure how long it takes, on average, to get paid. Add up all your unpaid invoices, divide by your average daily sales, and you get the average number of days a bill remains unpaid. For PR agencies, keeping this below 45 days is a good target. Long payment times strain your cash flow, making it hard to pay your team on time.

Pipeline coverage looks forward. It shows how much potential future revenue you have in your sales pipeline compared to your revenue target. For example, if you need £100,000 of new business next quarter, a healthy pipeline might contain £300,000 of potential opportunities. This metric reduces the panic of not knowing where your next client is coming from.

How can a PR agency implement a simple KPI dashboard?

A PR agency can implement a simple KPI dashboard by choosing 5-7 metrics, setting up a basic spreadsheet or using dashboard software, and committing to a regular review rhythm. The goal is visibility, not perfection. Start with what you can measure now, even if the data isn't perfect, and improve it over time.

Your dashboard should include: Gross Margin %, Average Utilisation Rate, Revenue per Employee, Project Margin (for top 3 clients), and Debtor Days. These give you a balanced view of profit, efficiency, and cash health. Update these numbers at the end of each month.

You don't need expensive software to start. A well-organised Google Sheet or Excel file that pulls data from your time-tracking tool (like Harvest or Clockify) and your accounting software (like Xero or QuickBooks) can work perfectly. The critical step is getting your team to consistently log their time against clients and projects.

Review the dashboard in a short, focused monthly meeting with your leadership team. Don't just look at the numbers – ask "why?" If utilisation dropped, was it due to a quiet sales month or too much internal work? This turns data into decisions. Using a financial planning template can provide a ready-made structure for this review.

When should a PR agency seek professional help with financial KPIs?

A PR agency should seek professional help with financial KPIs when the founders are spending more time wrestling with spreadsheets than serving clients, when growth feels chaotic instead of controlled, or when profitability is inconsistent despite good revenue. An external expert can set up systems, provide benchmarks, and offer objective advice.

The first major growth phase, often around the 5-10 person mark, is a common trigger. At this size, managing finances in your head or with simple tools becomes risky. You need proper processes to ensure you can pay a larger team and manage more complex client portfolios. Getting systems right at this stage sets you up for smoother scaling.

Another key time is when considering a big investment or change, like hiring a senior director, moving offices, or launching a new service. A professional can help you model the financial impact of these decisions using your KPIs. They can answer questions like, "What utilisation rate do we need to hit to afford this new hire?"

Working with specialist accountants for PR agencies means you get advice tailored to your industry's rhythms, from managing retainer revenue to pricing crisis communications. They speak your language and understand that your biggest asset is your team's time.