Metrics and terms
What makes up a budget and what are external services and agency services? And which metrics are derived from this? These questions are answered on this page.
Let's begin by clarifying the most important terms: Budget, agency and external service.
Budget
A Budget describes a sum of money that has been agreed with a customer for a job or customer account. Often the budget results from one or more estimates. In some jobs the job budget is part of an overarching customer account budget or is approved informally by e-mail or phone.
No matter how a budget comes about: it describes the sum of money available for the services defined in the job.
Costs
Against this are the costs that arise during a job. These are on the one hand external services, that is services of external providers and suppliers. On the other hand agency services, that is services that the agency employees enter into time tracking.
external services
external services are job-related costs of external service providers and goods suppliers. They arise in Die Agenturverwaltung after a supplier sends us a purchase invoice. The value of this purchase invoice is then posted to one (or several) jobs.
Only in connection with a job does the value of a purchase invoice become an external service. For example, the monthly invoice from a translation agency amounting to EUR 600 might be allocated to three external services: 1. EUR 220 for the job "Landingpage" of customer A 2. EUR 300 for the job "Content-Service" of customer B 3. EUR 80 for the job "Facebook ad group" of customer B
Examples of external services
Services
There are also other forms of external services, for example when parts of an assignment are awarded as a trade to a subcontractor - e.g. printing houses, proofreading offices, translation services, mobility and travel service providers, photographers, musicians. In this case the scope of services is coordinated with the provider, they prepare an estimate, perform the service during the job and are paid for it. These incurred costs are also referred to as external services.
Freelancers
Costs for freelancing or temporary work, where a sole proprietor or another company provides labor to your agency, are usually billed on an hourly basis according to effort.
If a freelancer also records time in the time tracking of Die Agenturverwaltung at the same time, their invoice is cost-neutral recorded on our job so that the service is not charged twice in the job.
Goods
The third form of external service is the purchase of materials or licenses. The assets to be purchased strongly depend on your business and range from stock images to printing materials for the production of print products.
agency services
The second cost type is agency services, i.e. working time incurred by employees of your agency. The working time is recorded in time tracking.
Agency services are billed to customers depending on the job setup
a) based on effort and hourly rate (service contract) or b) lump sum (contract for work).
Gross profit (or contribution margin) and result
Finally two important calculation variables, to consider the business success of the job: Gross profit and Result.
The Gross profit is calculated from the budget minus all external services and thus describes the part of the budget from which the agency lives.
To calculate the result the agency services are deducted from the gross profit. What remains is the monetary value that remains as result, profit or margin for the respective job.
Excursus
Tip: Recognize early whether a job will be successful
In this article we listed three indicators for an overdelivery and four ways to prevent it:
https://www.dieagenturverwaltung.de/de-de/blog/3-tipps-bei-der-einfuhrung-der-zeiterfassung
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