The Fractional Playbook + I asked my accountant to pull last year's numbers. Here's what I found.
I asked my accountant to pull last year's numbers. Here's what I found.
Half the money leaves immediately. The other half has a lot of explaining to do.
May 17, 2026 · Gev Marotz · 5 min read
TLDR Almost half our revenue goes to subcontractors. We pay ourselves out of what’s left. Fixed costs stay surprisingly stubborn. And after all of it, the studio runs at roughly a 40% net margin. The model works because the core stays small and the client relationships are high value.
I get asked about the business side a lot. Not the work, the structure underneath it. How does a fractional studio actually make money? What does it cost to run? Is it sustainable, or is it just a nicer word for freelancing?
So I asked my accountant to pull the last fiscal year, and I’m going to share it. I’ll use ratios instead of dollar amounts so you can plug your own numbers in. The honest version is more useful than the polished one.
Roughly 48 cents of every dollar that comes in goes straight back out to subcontractors. Some folks hear that and assume something’s wrong. It isn’t. That’s the model.
A fractional studio isn’t a solo practice and it isn’t a traditional agency. It sits in between. I hold the client relationship, set the direction, and own the outcome. Around that, there’s a network of designers, developers, and PMs who come in and out depending on what the work needs. When a project ends, they’re not sitting on payroll. When a project starts, they’re available.
That 48% is the cost of staying small at the core while still being able to deliver well.
How I actually learned this
When I was solo, I’d run three or four projects at a time. That looked productive, but in practice it meant nights and weekends, and eventually I hit a ceiling I couldn’t push through.
At some point I called my accountant and my financial advisor and told them I wanted to drop clients. Just do two or three at once because I liked that pace better. They both said the same thing: you’re saying no to money. Go hire a contractor.
That was it. Once I started treating each contractor as a margin-generating unit rather than a cost, the model made sense. If I can staff someone on a meaningful amount of client work and earn roughly 40% on top of what I pay them, each seat pays for itself and then some. I stopped trying to do less and started building the structure to do more without burning out.
The number I watch in the middle
The thing I actually track isn’t just the 48%. It’s what’s left after subcontractors but before everything else: gross margin. For us, that’s a bit over half.
For this kind of model, somewhere around 50% is healthy. A lot lower and you’re probably underpricing or over-delivering. A lot higher and you might be under-resourced or overcharging in a way that won’t hold. That middle range is the signal that the model is calibrated right.
What that 52% has to cover
Out of that remaining half, we pay ourselves a salary first. I keep that separate from profit on purpose. The business has to support the people running it. A studio that looks profitable only because the founder is barely paying themselves isn’t a real model. It’s delayed compensation.
After that come fixed costs. Legal, accounting, insurance, software, AI tools, invoicing, phone, internet, banking. At our current scale, that bundle is a few percent of revenue and it feels manageable. At an earlier stage, the same fixed costs might eat 10 to 12 percent of your revenue. This is why setting rates by feel almost always leads to underpricing. The fixed-cost floor is higher than it looks from the outside.
Then there’s relationship spend. Client meals, occasional travel, small thank-you items, the odd event. About 3% of revenue. I used to treat this as a nice-to-have. Now I think of it as either business development with a receipt or overhead with good vibes.
Here’s the honest part: I don’t have it perfectly tracked yet. I don’t always know which relationships are actually moving the business forward and which ones are just pleasant. That’s the question I’m working to answer.
The number I actually care about
After all of it, subcontractors, salary, fixed costs, relationship spend, the business runs at around a 40% net margin. For a services business, that’s very good. It came from keeping the core small, being honest about what work costs to deliver, and saying no to volume-style engagements that look good on a pipeline chart and bad on a P&L.
The number I care about more than margin, though, is revenue per active client. I won’t publish that because it would identify people. But the principle is this: the goal isn’t to serve as many clients as possible. It’s to build around a small number of high-trust, high-value relationships. I’m not fully there yet, but that’s the direction I’m optimizing toward. Everything else in this post is downstream of that.
One more thing
This newsletter made $2,151 last year. That’s not why I write it. But it’s on the books, so it belongs in the story.
One thing I mentioned and didn’t have a clean answer for: knowing which relationships are actually worth investing in. That’s the kind of thing that lives in your head when you’re running a fractional practice, and it’s exhausting to keep track of.
That’s part of what we’re building with Juggle. It’s built for fractionals and consultants, solo or with a small team. It’s not an AI assistant you have to prompt. It stays on top of things for you, tells you what needs attention, and offers to handle it. The goal is simple: feel in control, save time, do more.
Join the waitlist at joinjuggle.com if you want to be a beta tester.
The Fractional Playbook goes out every Sunday with something from the business side of this work. It’s free and always will be. If this helped, the most useful thing you can do is forward it to someone who’s trying to figure out their own version of this P&L.
