Services · Agency
Retainers were priced below delivery cost.
This marketing & margin audit surfaced $54k in recurring annual margin in a Services business, evidenced, senior reviewed, and delivered in 7 days.
The business
A marketing agency ran a book of client retainers that looked healthy on blended margin, and relied on that blended figure to reassure itself the business was comfortably profitable. Because the overall number looked fine, the profitability of individual accounts was rarely examined, and the assumption held that a healthy average meant a healthy book across the board.
What triggered the audit
Cash was persistently tighter than a healthy blended margin should allow, the same contradiction the agency routinely diagnosed for its own clients. Taking its own medicine, the audit broke the reassuring blend apart account by account, on the principle that a comfortable average is exactly where unprofitable work hides.
What the audit found
The blended margin was concealing a spread the agency hadn’t seen. Broken down account by account, several retainers were priced below their true delivery cost, accounts where the hours actually spent servicing the client exceeded what the retainer brought in, and these were being quietly funded by the genuinely profitable accounts sitting alongside them in the blend. Because leadership only ever looked at the aggregate, the loss making clients were invisible: the healthy average implied every account was fine, when in fact a subset was steadily draining the margin the rest generated. The unprofitable work buried inside the book came to roughly $54k a year, hidden by the same blended rate thinking the agency warned its own clients against.
What we changed
Repriced or exited every account sitting below its true delivery cost, ending the cross subsidy in which the profitable clients had quietly been funding the loss making ones inside the book.
Introduced per account margin tracking with a clear owner, so no individual retainer can ever again disappear into a comfortable blended average and hide a loss.
Set a minimum margin gate for all new business, preventing structurally underpriced accounts from entering the book in the first place.
Gave each account lead full visibility of their own account economics, so scoping and delivery decisions are finally made with real profitability in view.
The result
The outcomes were measured for three months after a 90 day implementation period. $54k a year recovered by fixing accounts the profitable ones were quietly funding, an annual figure equal to 9× the $5,950 Audit + Sprint fee. For any agency or services leader, the mirror is uncomfortable: a healthy blended margin implied every account was fine, while several ran below delivery cost. If you manage to a blended number, loss making clients hide inside the average with no one accountable. It takes per account economics to surface them, the very analysis you’d run for a client but rarely for yourself. A fixed fee audit delivers it in days, so you price new work with eyes open.
From kickoff to signed off findings: 7 days, inside our fixed 5–7 day window.
What the client said
$54k a year found in 7 days
Retainers priced below their delivery cost: 6 of 34 → 0 of 34
“Our blended margin said every account was fine. Leslie broke it apart account by account: six of thirty four retainers were priced below delivery cost, funded by the profitable ones. We repriced or exited them, our own advice.”
Leslie MartinSenior Auditor · signed this audit off