Chapters · 6
How to use the agency revenue leakage calculator
It is one of the tools behind our agency profitability guide.
- Pick a currency (formatting only).
- Enter billable people, weekly client hours and your average billable rate.
- Enter the four leak inputs from your own data (table below).
- Read "Look first at", then run that check in the seven-point leakage audit.
What to enter and where to find it
| Input | What it means | Where to find it | Default (example) |
|---|---|---|---|
| Billable people | People doing client work, in full-time equivalents | Headcount | 10 |
| Client hours per person per week | Hours on client work, logged or not | Contracted hours minus internal time | 32 |
| Average billable rate | Standard rate; on a retainer, fee ÷ hours sold | Rate card | 100 |
| Share of client work never logged | Client work never recorded | Two careful weeks of same-day logging against a usual week | 10% |
| Out-of-scope hours logged but not billed, a month | Logged hours on work outside the scope, not invoiced; unlogged hours go in the line above | Time export against the SOW | 20 |
| Realization rate on logged work | Share of logged in-scope value invoiced (or collected, see below) | Invoiced ÷ (in-scope hours × standard rate) | 90% |
| Write-offs, discounts and bad debt, a month | Losses realization does not already count | A year of credit memos and write-offs ÷ 12 | 0 |
If your realization rate comes from cash collected, enter 0 for write-offs: bad debt is already in it.
How the calculator works
Hours a month = people × weekly client hours × 52 ÷ 12; value = hours × rate. Unlogged leak = value × share never logged. Free scope leak = out-of-scope hours × rate. Realization leak = (value × (1 − share never logged) − free scope leak) × (1 − realization), never below zero. Write-offs are added as entered.
Example, the defaults: 10 × 32 × 52 ÷ 12 = 1,386.67 hours, worth $138,666.67. Unlogged $13,866.67; free scope $2,000; realization ($124,800 − $2,000) × 10% = $12,280; write-offs $0. Total $28,146.67 a month, $337,760 a year. Look first at unlogged time.
Why your result differs from published figures
Your share is of the work's value at your rates, while published figures use other bases and populations (see the evidence table of leakage estimates). On the defaults, $28,146.67 is 20.3% of the work's value but 25.5% of the $110,520 collected. Treat the result as directional and compare it with your own past months.
What to do with your result
| Look first at | Next step |
|---|---|
| Unlogged time | Audit point 1: same-day logging against tasks |
| Free scope | Audit point 2 and the retainer scope-control system |
| Realization | Audit point 3, and utilization with the utilization rate calculator |
| Write-offs | Audit point 4: monthly receivables review |
If the leaks sit between your SOW, time tracker, requests and invoices, that is the case for an AI operating system for agencies.
Download the 7-point audit worksheet (Markdown)
Where RevSmith fits (and where it does not)
RevSmith is not a time tracker or an accounting tool and computes no leakage percentage. It keeps what was sold and what has been used as a live count, and works out margin per client from the fee, the planned hours and the hours your team logs.
Sources
- Accelo, "What Is Revenue Leakage?", citing MGI Research, undated. Professional services firms; sample not published. https://www.accelo.com/glossary/what-is-revenue-leakage. S27, Verified-secondary.
- Pike, "Revenue leakage: 7 places agency margin disappears", undated. Agencies; no sample. https://usepike.com/blog/revenue-leakage-agencies. S29, Verified-primary (vendor estimate).
- Ignition, 2025 Agency Pricing and Cash Flow Report, 2025. 273 US agency owners, executives and senior leaders, April 2025. https://www.ignitionapp.com/2025-agency-pricing-cashflow-report. S35, Verified-primary.
- BlitzMetrics, "Where the retainer goes", on TMetric's 2026 study of its users and partners, undated. https://blitzmetrics.com/where-the-retainer-goes/. S33, Verified-secondary.
- It adds four leaks, names the largest and shows its working (this page's formula).
- Out-of-scope hours leave logged value before realization applies, so no hour counts twice (this page's formula).
- Its example defaults give $28,146.67 a month, 20.3% of the work's value (this page's formula).
- Published estimates run from 4.3% of revenue for professional services firms (MGI via Accelo) to 10% to 20% of potential revenue, without a method (Pike).
Frequently asked questions
What is poor time tracking costing my agency?
Multiply the work nobody logs by your rate. With 10 people on 32 client hours a week at $100, each 1% of work never logged is $1,386.67 a month, $16,640 a year. Enter your own share above; two careful weeks of same-day logging against a usual week tell you what it is.
How much does scope creep cost my agency a year?
Of 273 US agency leaders Ignition surveyed in April 2025, 57% lose $1,000 to $5,000 a month to unbilled scope creep and 30% more than $5,000; Ignition sells billing software. Your own yearly figure is out-of-scope hours logged but not billed a month × your rate × 12.
What share of hours go unlogged?
No agency study with a published method answers that. In TMetric's study of its users and partners, manual time capture reached only 67% to 68% of billable hours (TMetric, via BlitzMetrics). Measure your own; the 10% default is an example, not a benchmark.
Is the result exact?
No. It is an estimate from your inputs, and the share never logged and the realization rate are usually guesses until measured. On the defaults, moving both by five points cuts the total by 45%. Measure those two, then use the result to compare months.
Do you store what I enter?
No. The calculator runs only in your browser, stores nothing and sends nothing, so closing the page clears it. A currency choice changes formatting only; nothing is converted. To keep a record, copy your results into the free audit worksheet.