Weight by revenue; a simple average gives the smaller service too much influence. Fixed overhead is excluded.
Try this with your own numbersFormula and worked example
Combined margin = (total revenue − total variable cost) / total revenue × 100
| Input | Example |
|---|---|
| Revenue from service A | 12,000 |
| Variable cost of service A | 6,000 |
| Revenue from service B | 8,000 |
| Variable cost of service B | 6,000 |
| Calculated result | 40 % |
Choose reliable inputs
Include software licences, delivery time, revisions and ongoing support when costing a project. For this paid media agency calculation, use project time logs, licence invoices and retainer scopes and a consistent definition of one client month.
- Account management: include the portion belonging to this client month or reporting period, and record where the value came from.
- Creative: include the portion belonging to this client month or reporting period, and record where the value came from.
- Reporting: include the portion belonging to this client month or reporting period, and record where the value came from.
Use the same currency for every money input. Do not mix weekly costs with monthly revenue, or count the same expense in both an itemised cost and allocated overhead.
Can I average the two margin percentages?
Weight by revenue; a simple average gives the smaller service too much influence. Fixed overhead is excluded.
What if this input changes?
If revenue from service a rises by 10%, this example changes by 3.3962 %. This shows the effect of one change; it does not predict what will happen.
Open the calculator, save your baseline, then change the input supported by the least reliable estimate in your records. Compare both scenarios before committing to a price or capacity promise.