Freelance & Agency health calculator

Agencies can show a profitable month on the P&L while the checking account is empty, because utilization, receivables, and one oversized client are doing the real work. This calculator is for freelancers and small studios who track hours and invoices, even loosely.

Who this is for

Solo operators, two- to twenty-person studios, and consultants. If you manufacture goods, use manufacturing. If you only sell a physical product, use retail.

What to enter first

Revenue, hours worked, billable hours, labor (including your own if you pay yourself), operating expenses. Retainers unlock MRR/ARR. Largest-client revenue unlocks concentration. Marketing spend and new clients unlock a crude CAC.

Worked example: five-person brand studio

Original trailing year.

  • Revenue: $742,000
  • Hours worked (everyone): 8,800
  • Billable hours: 5,210
  • Payroll: $410,000
  • Contractors and tools: $86,000
  • Largest client: $268,000
  • Retainer MRR at year end:
  1. Billable utilization = 5,210 ÷ 8,800 = 59.2%. Many small agencies aim nearer 60–75% billed. They are at the floor, which means a lot of “internal” and pitch time is unpaid.
  2. Effective rate on all hours = 742,000 ÷ 8,800 = $84.32. On billable hours only = 742,000 ÷ 5,210 =
  3. Concentration = 268,000 ÷ 742,000 = 36.1%. The band we watch is often 30% as a caution. One email from that client is a going-concern event.
  4. ARR on retainers = 18,500 × 12 = $222,000 — 30% of last year’s revenue is repeating. The rest is hunt. Runway should be read with that mix in mind.

Hiring another designer increases hours in the denominator. If utilization is 59%, you may need a retainer and a collection process more than a sixth salary. That is a deliberate bias in how this page explains the KPIs.

How to read the results

Utilization is time converting to invoices. Effective rate is pricing. Concentration is survival. MRR/ARR is how much of next year is already sold. CAC is only as good as how honestly you count “new clients.” Cash runway explains the profitable month that still felt broke.

Mistakes that make the math useless

  • Counting unpaid revisions as billable so utilization looks like 80%.
  • Revenue on invoice date, cash on 60-day terms, then blaming “the economy.”
  • Owner drawings missing from labor.

When to re-run the check

After a hire, a rate-card change, a retainer churn, or a quarter where one client became a third of the shop. Do not wait for the year-end PDF from the bookkeeper.

I am a solo freelancer. Still use hours?

Yes. Even a rough 1,800-hour year keeps effective rate honest. Vanity revenue without hours hides a $30/hour reality.