Read the profitability page
How Verbial computes margin from contracted revenue and absorbed cost, and what idle time and servicing gap mean.
The Profitability page under Reports & insights answers one question: net of their cost, how much did each client, department, and person make the agency. This article explains each number so the page reads the same to everyone who opens it.
Steps
- Go to Reports & insights, then Profitability.
- Pick a period: This month, Last month, This quarter, Year to date, or a trailing 30, 90, or 365 days. All math runs in UTC.
- Read the stat strip, then the client table, then the trailing twelve-month trend.
- Open Department P&L (currently in beta) for the same model by department and by client within a department.
How is revenue calculated?
Recognised revenue is contracted revenue. Each retainer period's amount is spread evenly across its own days and each reporting window takes the overlapping slice. A clean 31-day $15,000 period recognises $15,000 in that month; a 294-day $47,980 period recognises about $4,896 a month.
| Counts as revenue | Does not |
|---|---|
| Retainer period amount | Carried-over credit from the previous period, already recognised when billed |
| Pre-paid overage value | Invoices and cash, which are not attributed to a month |
| Media campaign management fees | Media pass-through spend |
Hourly and flat projects without a contract show delivered value, hours times rate, and are labelled as such. Cash-basis revenue with per-month overrides is currently in beta.
How is cost calculated?
Salaried people are costed by absorption. Each person's monthly employer cost is spread across the hours they logged in the month, so a fully utilised person is cheap per hour and a lightly utilised person is expensive. The part of salary not absorbed by client work is idle time, charged to departments according to Settings, then Cost allocations. Hourly and contractor people are costed at hours times their cost rate. External costs such as vendor payments and media fees are added where they belong.
Reading the client table
- Contract: recognised revenue for the window.
- Delivered cost: absorbed cost of the hours logged.
- Margin: contract minus delivered cost.
- Servicing gap: contract minus delivered cost minus the department's idle share. A negative gap before idle is counted means the work itself costs more than it earns.
What to check
- Numbers are only as good as retainer periods, employer costs, campaign fees, and rate snapshots. The Data health panel lists every gap with a link to fix it. See Fix data health and cost allocations.
- Directors see department revenue on Department P&L but never cost or margin.
Questions
Why is revenue not hours times rate?
On a retainer, hours times rate is fiction in both directions. A team logging $22,000 of value against a $15,000 retainer did not earn $22,000; a team logging $9,000 still collected $15,000. Revenue comes from the contracted period amount plus pre-paid overages.
Who can see this page?
Admins only, on plans that include Profitability. It is the one place cost, salary, and margin appear together.
What is the servicing gap?
The difference between what a client's contract pays and what it costs to service including the team's idle time. It answers whether more of this work helps or hurts.