How to track project profitability in a PR agency?

Key takeaways

• Most PR agencies don't track project profitability at all — they know total revenue but have no idea which projects drain profit and which fund growth
• Accurate time tracking is the foundation — without it, you're guessing what campaigns actually cost to deliver
• Project margin analysis tools reveal patterns — the same client types or service models consistently outperform or underperform
• Typical PR agency gross margins range from 45-65% — knowing where each project sits helps you price better and resource smarter
• Monthly project reviews catch problems early — waiting until a campaign ends means you've already lost the profit

Many PR agencies can tell you their total monthly revenue within seconds. Ask them which projects made money last quarter and you'll get a shrug. This gap between knowing revenue and understanding profitability kills more agencies than bad pitches ever will.

Tracking project profitability means knowing exactly what each campaign, retainer, or client costs to deliver. Then comparing that cost to what you charge. The difference is your margin (the money left after you've paid everyone involved).

For PR agencies juggling media relations, crisis work, influencer campaigns, and content creation, this gets messy fast. Different projects need different skill sets. Some campaigns run for months. Others explode overnight and demand all hands on deck.

Without proper tracking, you make decisions blind. You chase revenue that burns your team. You undercharge high-value clients. You overservice low-margin accounts because you don't realise they're costing you money.

Why do most PR agencies struggle to track project profitability?

PR agencies face specific challenges that make profitability tracking harder than other agency types. The work doesn't fit neat boxes. Campaigns evolve. Scope creeps. Reactive work interrupts planned work constantly.

Most PR agencies bill time but don't track it properly. Your team logs hours in one system, invoices go out from another system, and actual project costs live in a third system. Nobody connects the dots.

Crisis work makes this worse. When a client's reputation is on fire, you throw resources at it immediately. The commercial conversation happens later (if at all). These reactive bursts distort your true project costs.

Retainers create another blind spot. You invoice the same amount every month, which feels predictable. But the work required fluctuates wildly. Some months you barely touch an account. Other months you deliver three times the agreed scope. Without tracking actual hours against each retainer, you don't know if you're making money or subsidising the client.

Many PR agencies also run a mix of retained and project work. Different pricing models (monthly fees, day rates, success fees) make it harder to compare profitability across your client base. You need a system that handles all of them consistently.

The biggest issue we see working with PR agencies: time tracking feels like admin overhead. Your team wants to pitch stories and build relationships. They don't want to log hours in a spreadsheet. So tracking becomes patchy, estimates replace actuals, and profitability data becomes unreliable.

How should PR agencies track time for project profitability?

Time tracking for profitability means capturing actual hours worked against specific projects or clients. This is different from timesheets for invoicing. You're not billing by the hour necessarily. You're measuring what campaigns cost to deliver so you can make smarter decisions.

Start by implementing simple daily time tracking across your whole team. Every person records what they worked on, for which client, and for how long. Use project codes or client names consistently so you can roll up the data later.

Choose software that makes logging time fast. The easier it is, the more accurate your data becomes. Tools like Harvest, Toggl, or Clockify work well for most agencies. They integrate with project management systems and accounting software. Your team can track time as they work rather than reconstructing their week on Friday afternoon.

Break your work into trackable categories. For a PR agency, this might look like: media relations, content creation, event management, crisis response, strategy, reporting, admin. When someone logs time, they tag it with the activity type and the client.

This reveals patterns you can't see otherwise. You might discover that client reports consume 15% of your team's time but generate zero direct revenue. Or that crisis response accounts consistently blow their time budgets by 40%. These insights drive better resourcing and pricing decisions.

Set weekly reminders for time entry. Make it part of your rhythm. Some agencies do a Friday wrap where everyone reviews their week and logs any missing time. Others use daily standups to prompt time tracking. Find what works for your culture.

Track both billable and non-billable time. Billable time goes directly to client work. Non-billable time includes pitches, internal meetings, professional development, and admin. Understanding the split helps you calculate your true utilisation rate (the percentage of your team's time that actually generates revenue).

For PR agencies, typical utilisation ranges from 60-75%. If yours is lower, you're either underpricing, overstaffed, or spending too much time on non-revenue activities. If it's higher than 80%, you're probably burning people out or underinvesting in growth.

What does project costing look like for PR agencies?

Project costing means calculating what a campaign or retainer actually costs you to deliver. You take all the hours worked, multiply them by your team's cost per hour, then add any direct expenses (freelancers, media monitoring tools, event costs).

Calculate each person's cost per hour by dividing their total employment cost by their available working hours. Total employment cost includes salary, employer taxes, benefits, equipment, and their share of office overheads. Available working hours means their contracted hours minus holidays and sick days.

For example, if someone costs you £45,000 a year all-in and they have 1,800 billable hours available, their cost per hour is £25. When they work 10 hours on a client project, that project costs you £250 in labour.

Track freelancer and contractor costs separately. These are direct project costs that you can attribute exactly. If you spend £2,000 on a freelance journalist for a campaign, that £2,000 goes straight into that project's cost.

Add subscriptions and tools that serve specific clients. If you pay for a media monitoring platform for one particular client, allocate that cost to their projects. Don't spread it across all clients unless everyone benefits equally.

Once you have total project cost, compare it to project revenue. If you billed £10,000 and the project cost £6,000 to deliver, your gross margin is 40%. That's the money available to cover your agency overheads (rent, senior salaries, software, marketing) and hopefully generate profit.

For PR agencies, typical gross margins range from 45-65%. Retained work often sits at the higher end because you control scope better. Project work and crisis response tend to run leaner margins because scope creep is harder to contain.

Low-margin projects mean you're working hard to subsidise clients. High-margin projects fund your growth, pay for pitches, and create breathing room. Knowing which is which lets you resource differently, price better, and say no to bad-fit opportunities.

Which project margin analysis tools work best for PR agencies?

Project margin analysis tools connect your time tracking data with your financial data. They show you profitability by project, client, service type, or team member. This visibility transforms how you run your agency.

Most accounting software (Xero, QuickBooks) can track project profitability if you set it up properly. You create a project or job for each client or campaign, then code all costs and revenue to that project. Monthly reports show you which projects made money and which didn't.

Dedicated tools like financial planning templates combine time tracking, invoicing, and cost allocation in one view. They're built specifically for service businesses and make profitability tracking much simpler than spreadsheets.

For larger PR agencies, platforms like Streamtime or Productive offer deeper analytics. They track budgets versus actuals in real time, flag projects going over budget, and forecast profitability before campaigns finish. This early warning system is valuable when you're managing dozens of active projects simultaneously.

Choose tools that integrate with what you already use. If your team tracks time in Harvest and you invoice through Xero, find a tool that pulls data from both. Manual data entry creates errors and nobody maintains it long-term.

Set up monthly profitability reviews. Block an hour to analyse your project margins from the previous month. Look for patterns. Which clients consistently deliver strong margins? Which service types underperform? Are specific team members more profitable than others (often a sign of pricing misalignment, not performance)?

The most profitable PR agencies we work with review project margins weekly for active campaigns. They don't wait until projects finish. If a retainer client has consumed 20 hours in week one of a 40-hour monthly budget, they have a conversation immediately. Catching overruns early lets you adjust scope, renegotiate fees, or resource differently.

How can PR agencies improve project profitability through better tracking?

Better tracking reveals three types of insight: which projects to replicate, which to fix, and which to stop doing. Acting on these insights improves your overall agency margin faster than chasing more revenue.

Start by identifying your highest-margin projects from the last six months. What do they have in common? Often you'll spot patterns around client size, industry sector, service mix, or engagement model. These become your ideal client profile. Focus your new business efforts here.

For underperforming projects, diagnose why margins are low. Common causes: scope creep, inefficient processes, wrong team structure, or simply underpricing. Each problem has a different solution.

Scope creep happens when clients get more than they pay for. Track scope changes separately. If a crisis erupts and you deliver crisis management on top of your retained PR work, that's additional scope. Either charge for it or formally reduce other deliverables to compensate.

Inefficient processes show up as excessive hours for routine tasks. If monthly reporting takes 8 hours when it should take 3, you need better templates or automation. Time tracking data pinpoints exactly where inefficiency lives.

Wrong team structure means senior people doing junior work (expensive) or junior people struggling with complex work (slow and risky). Tracking time by person and by task type reveals mismatches. Reassigning work can improve margins without changing pricing.

Underpricing is the simplest fix. If a service consistently delivers strong outcomes but weak margins, raise your prices. Most PR agencies underprice retained work because they anchor to what they charged five years ago. Costs rise (salaries, tools, office space). Prices need to rise too.

Use project profitability data to set minimum margin thresholds. Decide you won't accept new work below a certain gross margin (say, 50%). This filters opportunities at the pitch stage. You'll pitch less but win more profitable clients.

Track your team's utilisation alongside project profitability. High utilisation with low margins means you're busy but broke. Low utilisation with high margins means you have capacity to grow. The sweet spot sits around 70% utilisation with 55%+ gross margins.

Review your pricing models regularly. Some PR agencies blend retained fees with success bonuses or project top-ups. Others charge day rates for reactive work. The right model depends on your service mix, but profitability tracking shows you which models actually work in practice.

What metrics should PR agencies track alongside project profitability?

Project profitability tells you if individual campaigns make money. But you need a few other metrics to understand your overall financial health and make smart growth decisions.

Gross margin is your total revenue minus your direct costs (team salaries, freelancers, project-specific tools). This is usually expressed as a percentage. For PR agencies, typical gross margins range between 45-65%. Below 45% and you're probably underpricing or overstaffed. Above 65% is excellent and suggests strong pricing power.

Utilisation rate measures what percentage of your team's available time generates revenue. Calculate it by dividing billable hours by total available hours. A 70% utilisation rate means 70% of your team's time goes to client work and 30% goes to pitches, admin, holidays, and downtime.

Average project margin shows your typical profitability across all work. Track this monthly. If it drops suddenly, investigate which projects dragged it down. If it improves, understand why so you can replicate it.

Revenue per employee measures how much each person generates on average. Divide total revenue by headcount. For PR agencies, £80,000-£120,000 per head is a common range. Lower suggests underpricing or low utilisation. Higher suggests strong pricing or efficient delivery.

Client concentration tracks how much revenue comes from your biggest clients. If one client represents more than 25% of revenue, you have concentration risk. Losing them would devastate your business. Profitability tracking helps you identify which smaller clients to grow so you can reduce dependence on any single relationship.

Days to payment measures how long clients take to pay invoices. PR agencies often extend generous payment terms to maintain relationships, then suffer cash flow problems as a result. Tracking debtor days (the average time an invoice sits unpaid) highlights problem clients. You can make money on paper but run out of cash if nobody pays on time.

These metrics work together. Strong project margins mean nothing if utilisation is too low (not enough work) or too high (burning out your team). High revenue per employee looks great until you realise it comes from one client who could leave tomorrow.

When should PR agencies get professional help with profitability tracking?

Most PR agencies start tracking profitability when they hit a growth wall. Revenue goes up but profit doesn't. Or worse, profit shrinks as you get busier. This usually signals a tracking and pricing problem.

If you're running a PR agency with more than three people and you can't answer basic profitability questions (which clients make money, what your average margin is, whether last quarter was profitable), you need better systems now.

Specialist accountants for PR agencies understand the specific challenges of tracking project profitability in communications businesses. They set up systems that connect time tracking, project costing, and margin analysis without drowning you in spreadsheets.

The right support includes helping you choose tools that fit your size and service mix, building reporting dashboards that actually inform decisions, and training your team on what to track and why it matters.

You should also seek help when you're making major decisions: hiring senior people, moving into new service areas, pricing a major pitch, or deciding whether to drop unprofitable clients. Having accurate profitability data makes these decisions obvious rather than stressful.

Many PR agencies resist professional support because they assume it's expensive or complicated. In practice, getting profitability tracking right pays for itself within months. You stop subsidising bad clients, price new work properly, and resource projects efficiently. The financial impact is immediate.

Warning signs you need help now: you're always busy but money feels tight, you avoid looking at your numbers because they're depressing, your team complains about workload but you can't afford to hire, or you're scared to raise prices because you think clients will leave.

These are symptoms of not knowing your true costs and margins. Once you see which work actually makes money, the path forward becomes clear. You're not just tracking numbers. You're gaining control of how your agency grows.