Track People Costs as a KPI: The AGI Metric That Drives Agency Profitability

For creative, marketing, and PR agencies, people are the largest expense—and one of the most important metrics to manage.

In this video, we explain why failing to track people costs as a key performance indicator (KPI) can lead to poor hiring decisions and reduced profitability. Many agency owners hire based on workload rather than financial data, which can quickly impact margins.

We also walk through a real-world example of an agency generating nearly $2 million in Agency Gross Income (AGI), where people costs rose to almost 70%—leaving little room for overhead and profit despite a strong sales pipeline.

Key takeaways include:

✔️ Why people costs should be measured against AGI (gross profit)—not total revenue
✔️ How pass-through costs can distort financial clarity
✔️ Target benchmarks:
• ~55% = Healthy
• 60% = Tight margins
• 70% = Unsustainable
✔️ A simple step-by-step approach to calculate your people cost ratio using recent financials

Understanding and managing this KPI can help you make smarter hiring decisions, improve margins, and build a more profitable agency.
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00:00 People Cost Reality
00:30 Hiring Without Math
00:39 Overstaffed Case Study
01:18 AGI Not Revenue
01:56 KPI Prevents Emotion
02:44 Monthly Metric Wins
03:00 Profitability Payoff
03:19 Calculate Your Percentage
03:49 Get Expert Help
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Видео Track People Costs as a KPI: The AGI Metric That Drives Agency Profitability канала Craig S. Cody CPA