Opportunity cost
What is Opportunity cost?
The value of the work you couldn't take on because the team was busy with something else.
Every hour spent on a low-margin or over-serviced project is an hour not spent on a higher-margin one. The cost is invisible on the P&L but it is the reason cleaning up underwater projects often raises agency margin faster than winning new work.
Related terms
- Tool switching costThe capacity lost when team members move between tools and contexts during the day.
- Retainer fatigueThe gradual erosion of margin and energy on a long-running retainer as scope drifts and the team loses momentum.
- Capacity-vs-sales constraintWhether an agency's growth ceiling is the work it can deliver (capacity-constrained) or the work it can sell (sales-constrained).
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