Profitability Report

What is a profitability report?

A profitability report shows the actual financial margin on every project and client: revenue invoiced minus the real cost of delivering that work (hours × team member rates). It's the report that answers the questions most agency owners know they should know the answers to, but don't: which clients are actually profitable, which are break-even, and which are quietly subsidized by the profitable ones.

Melororium's Profitability Report calculates margin per project and per client automatically from the data that already exists in the system — invoiced amounts from the invoice module and team cost from the time tracker (hours × the hourly cost rate set per team member). The report filters by any date range and can compare monthly, quarterly, or annual periods.

Why agencies discover unprofitable clients too late

Most agency owners have an intuition about which clients are profitable. The reality revealed by a data-based profitability report is often different. The client who pays the largest invoices may have the most revision cycles and the most hours invested — making their margin lower than a smaller client with a tighter scope. The client who was "easy to work with" when revenue was low may now consume a disproportionate share of senior team time for a rate that no longer reflects that cost.

Without a formal profitability report, these patterns stay invisible. Pricing decisions, account investment, and renewal negotiations happen on intuition rather than data.

How agencies track profitability without complex accounting

Revenue vs. cost per project

Revenue is the invoiced amount. Cost is the sum of (hours per team member × their internal hourly cost rate). The margin is the difference. A project billed at $8,000 where the team spent 80 hours at an average cost of $60/hour has $3,200 in team cost and $4,800 in gross profit — a 60% margin. A project billed at $12,000 where the team spent 150 hours at $70/hour has $10,500 in cost and $1,500 in profit — a 12.5% margin. Both look like good revenue; only the profitability report reveals the difference.

Profitability trend over time

Filter the profitability report by quarter to see whether margins are improving or declining over time. If a client's margin has dropped from 55% in Q1 to 38% in Q3 without a corresponding increase in their invoice value, the scope has expanded without the rate adjusting. That's the conversation to have at the next retainer renewal.

Most and least profitable client comparison

Sort clients by profit margin to see the ranking. The bottom of the list — clients with the lowest margins — are candidates for rate renegotiation, scope tightening, or off-boarding. The top of the list shows which client types and project types produce the best returns — data that should shape future business development efforts.

Per-team-member cost without sharing salaries

Set an internal cost rate per team member (separate from the client billing rate). This cost rate is used for profitability calculations but is visible only to owners and admins — not to the team members themselves. The profitability report shows accurate margin without requiring HR data to be visible across the team.

Profitability report vs. manual calculation

Most agencies calculate profitability occasionally — maybe once a year during a strategic review — using a spreadsheet that requires pulling data from multiple sources: Toggl for hours, FreshBooks for invoices, and internal cost data. The process takes half a day and produces a point-in-time snapshot.

Melororium's profitability report is live and continuous — updated every time a timer stops or an invoice is marked paid. Any team member with admin access can pull the current profitability picture in 30 seconds. Agency plan for 10 users is $59/mo.