Healthy Salary-to-Revenue Ratio for Agencies
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The salary-to-revenue ratio is what you pay your team as a share of the commission your agency earns.
What it is
Salary-to-revenue ratio = total pay ÷ gross commission revenue × 100.
Total pay is everything you pay people: salaries, commission, bonuses, and the owner's own pay. Gross commission revenue is everything the carriers paid the agency in the same year.
A worked example
Example. Your agency earned $1,200,000 of commission this year and paid $720,000 to its people, owner included. The ratio is $720,000 ÷ $1,200,000 = 60%.
How to work out yours
- Add up the year's commission from every carrier.
- Add up the year's pay: every salary, commission and bonus, and the owner's pay.
- Divide the pay by the commission.
What "healthy" means
We have found no dated, published study of this ratio that we can point you to, so we give no target. Read yours against your own history instead:
- Rising, because of a new hire: expected while a new producer ramps up. Their pay starts before their book does.
- Rising for two years or more: pay is growing faster than the commission the team brings in. Look at each person's numbers.
- Very low: check you count the owner's pay. An owner who pays themselves little makes the ratio look healthier than the agency is.
How Producify works it out
Producify sets cost against revenue for one person at a time, on the Employee ROI tab of their Team record.
The tab needs the person's pay on file: without it, cost and breakeven are hidden. Net to the agency is revenue minus cost for the period you pick.
Revenue is the issued premium of the person's sales × your office rate, with renewals, and cost is their base pay, commission and service fee. See Read Employee ROI.
Frequently Asked Questions
Does the ratio include the owner's income?
Yes. Owner pay, as salary or draw, counts as pay, or the ratio flatters the agency.
What if I run a commission-only shop?
The ratio still works: the commission you pay is the pay.
How often should I check it?
Once a year, and again after each hire or departure.
See what each person costs and brings in
See what each person costs against the revenue from their book, on the Employee ROI tab in Producify.