Function Point Publishes Profitability Made Easy for Creative Agencies

October 27, 2015

function point productivity software has published Profitability Made Easy, an eBook written for ad agencies, design studios and internal marketing departments to assist them in understanding and finding solutions to universal business challenges they’re faced with in the advertising and marketing industry. The eBook focuses specifically on common mistakes and best practices for developing estimates, rates, retainers and key performance indicators (KPIs).

The idea for an industry eBook first began to percolate when function point staff noticed certain trends in the day-to-day business issues their clients were dealing with. “Here at function point, we work with agencies of all types and sizes,” said Marc Wilson, Senior Success Consultant at function point. “Every agency has different needs and challenges, but one thing is consistent for all; the desire to be a profitable agency. We wanted to provide our clients, and all agencies, with an easy-to-read and understand guide to ensuring that they can be profitable this year, and every year after that.”

Since the company works closely with agencies to develop new software features for its integrated project management system, function point customer specialists and developers are in an unique position to see the problems that typically crop up for a broad range of agencies, from small to large, across North America. Profitability Made Easy emerged from the need to address some of these issues critical to agencies, and organize different approaches to solutions.

“Many agencies are struggling with understanding how to calculate a true profit/loss, with all factors considered,” said Wilson. “They’re not confident that their cost and billing rates are accurate, they don’t know the KPIs they should be looking at that can help them to predict future profitability of projects, and they’re not sure if they’re tracking time correctly to ensure the accuracy of reports. This eBook provides answers to these questions.”

One of the major concerns of agencies revolves around estimates: including underestimating or overestimating on jobs; giving too much detail to the client, and conversely, not enough; guessing on employee rates, capabilities and availability; and not having easily accessible historical job information on which to base new estimates.

A second area addressed by the e-publication is the determination of rates—a key factor in an agency’s profitability. The eBook explains why many agencies don’t charge enough—whether they are basing rates on industry averages instead of a rate specific to their agency, or failing to adjust fees to account for senior staff’s time on projects. Profitability Made Easy outlines a number of methods to calculate cost rates, billing rates, overhead factors and more. In addition, the importance of maintaining strict time-tracking for those agencies using fixed fee rates—in order to report on profitability of projects—is also discussed.

More and more agencies are shifting to retainer agreements with their clients, and the attendant pros and cons are outlined, as well as the need for contingency plans. Tips on agreements, billing for expenses, holding six-month reviews and keeping invoicing schedules efficient and automated are offered.

The eBook is rounded out by a closing section on why it’s important for agencies to determine what their KPIs are, and why they should be tracked. Suggestions for possible KPIs are listed, as well as best practices regarding reports on profitability. Profitability Made Easy ends with a final note on encouraging agencies to assess and change KPIs based on long-term data, and as the agency itself evolves.

About function point productivity software inc.
function point productivity software is the leading all-in-one project management solution specially designed for ad agencies, design studios and internal marketing departments who are looking to streamline their business. Our integrated software combines project management, time tracking, CRM, financial, and business reporting tools in one convenient cloud based system. Easy, effective, and efficient — do more with function point.

For more information about the company and the services Function Point offers, please visit

Are You Making The Right Decisions for Your Agency? Free Guide Download

Learn how an all-in-one agency management tool takes away the guesswork and helps you make better decisions for a thriving team, happy clients, profitable agency growth.