EBITDA for agencies: the overlooked metric every agency should be tracking

You sold a project, managed it well, kept external costs under control, and stayed within budget. Well done!

You check the margin: it looks solid, the client is happy, and so is the project manager.

But… did the company actually make money?

Margins aren’t everything.

There’s a key metric that often gets ignored because it sounds like "finance team stuff": EBITDA.

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Let’s rewind for a second. It's ice cream time!

In our favorite example, you sell an ice cream for €2.00.
The cost of ingredients and labor to make it is €0.50.
Result: Contribution margin = €1.50.

That €1.50 is what you use to pay for:

• the shop rent
• electricity and bills
• your management software
• basically, everything that keeps the business running

All those costs that keep your company standing, that’s exactly where EBITDA comes in.
It shows what’s truly left in the business after covering operating expenses, and before taxes and interest.

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What is EBITDA (and no, you don’t need an MBA to get it)

EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization.

It sounds like a term cooked up by a stressed accountant, but it’s actually one of the most important metrics for any decision-maker in a business, agency or elsewhere.

In plain English?
EBITDA = what your business really earns from its operations after variable and fixed costs, but before financial and extraordinary items.

It connects revenue, direct costs, and overheads without distractions.

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EBITDA ≠ Revenue ≠ Margin

Let’s be clear:
Revenue is what you sell.
Gross margin is what’s left after direct costs (freelancers, tools, media buys, etc.).
EBITDA is what remains after you also subtract salaries, rent, bills, and all your other operating expenses.

And that’s why it matters: EBITDA tells you if your company is actually sustainable.

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A simple agency example

Let’s say your agency brings in €1,000,000 a year in projects.

• Direct project costs (freelancers, SaaS, media) = €400,000
• Payroll = €350,000
• General overhead (office, utilities, admin) = €150,000

That leaves you with €100,000 EBITDA.

Not bad, but fragile. If you lose two clients or increase salaries, that buffer disappears.
That’s why monitoring EBITDA isn’t just for the CEO: it matters to project managers, account teams, and operations too.

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Why EBITDA matters to you (yes, even if you’re not the CFO)

• If you’re a Project Manager, EBITDA shows whether the projects you manage support the business or merely cover short-term deficits.
• If you’re in Sales, it helps you price proposals based on the real costs the agency must absorb.
• If you lead a team, understanding your contribution to EBITDA helps guide better operational decisions.
• If you’re a founder or partner, well, you already know: EBITDA is what investors and acquirers look at to assess your agency’s health and value.

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How do you calculate EBITDA in an agency?

To track EBITDA properly, you need clarity on three core elements:

1. Accrued revenues (based on project timelines, spread across months)
2. Direct external costs (freelancers, vendors, media…)
3. Fixed operating costs, such as:
   • Payroll (salaries, bonuses, benefits)
   • General expenses (rent, utilities, software, marketing, etc.)

It’s not complicated.
The real challenge? Getting all the data together in one place, up to date, and not scattered across Excel spreadsheets or locked in someone’s head.

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EBITDA on wethod: clear numbers, no need for a CFO

The Profit & Loss section of wethod, gives you a real-time and forecasted view of your EBITDA, project by project, month by month.

• Each revenue is linked to projects.
• Each external cost is matched to to the time it is incurred.
• Personnel costs are based on Gross Annual Salaries, not time tracking.

This means you can see the real costs, regardless of whether someone logs their hours.

Best part?
Wethod’s P&L starts from your current data and projects forward, showing future EBITDA based on your pipeline, team, and forecasted overheads.

• If the upcoming months cover your structure: go ahead and invest.
• If not, it's better to know now than two months too late.

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Beneath the margin: the deep end

EBITDA is like an iceberg: the visible project margin is just the tip.
Below the surface are your operating costs, business decisions, contracts, and numbers that you can’t afford to ignore.

• Understanding it brings clarity.
• Tracking it brings responsibility.
• Using it to make decisions? It brings success.

That's leadership, and no, you don’t need a finance degree.
You just need a tool that tells you the truth.

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👉 Want to know your agency’s EBITDA without having to crunch the numbers manually? Try wethod: the platform that clearly and simply shows you whether your projects are truly supporting your business.

Request your free demo now and start getting the full picture.