See how much work you're giving away for free
A few extra hours here and there don't look like much. Across a client base. they can add up to a full-time-salary, or more. Enter the hours you scope for a typical client, how much extra time your team usually spends, and your charge-out rate. The calculator will show you the annual impact in hours, revenue and full-time employees.
- How the calculation works
- What your result means
- Where unbilled work comes from
- How it shows up by sector
- Catching it while it happens
See scoped hours against actual hours on every client, updating as time is logged.
Book a demoHow the calculation works
"Phantom employee" is simply an easier way to picture your unbilled work. The calculator takes all the hours your team delivers without invoicing for them and converts them into a full-time equivalent. It also shows what those hours would have been worth at your normal chargeout rate.
In this example, the agency is effectively giving away almost one full-time employee's worth of work every year. Thats around £146,000 of work delivered without being invoices.
Why we use 1,720 hours
A full-time employee may technically have 2,080 working hours in a 52-week year, but that isn't a realistic billable capacity. Once you account for leave, sick days, training and internal work, around 1,720 hours is a more useful working figure. Using 2,080 would make the amount of unbilled capacity look smaller than it really is.
Which hourly rate should you user?
Use your blended charge-out rate.
The calculator is estimating the revenue attached to those unbilled hours, so use the rate you would normally have charged the client. If you enter your internal cost rate instead, you'll be calculating the cost of delivering the work rather than the revenue you could have invoiced.
A few things to keep in mind
Original research
What 104 agencies told us about over-servicing
We surveyed 104 agencies as part of our agency benchmarking research. The results show just how common budget overruns are, and why they're often spotted too late.
68%
Regularly go over project budgets
More than two-thirds of agencies told us they go over project budgets regularly. 36% said it happens in most months and quarters, while another 33% said they exceed budget three to five times a year. Just 6% said they never go over.
57%
Don't get a warning before budget has gone over
Fewer than half of agencies are alerted before a project reaches its budget. 22% only find out once the budget has already been exceed, 15% after the project has finished and 20% aren't notified at all. By the time the problem becomes visible there isn't much that can be done about it.
33%
Log time as they work
Only a third of agencies said their teams record time as they go. Everyone else is relying on end-of-day entries, weekly timesheets, or in some cases, no consistent time tracking at all. The longer the gap between doing the work and recording it, the harder it becomes to get an accurate view of where the hours went. That matters when you're trying to understand whether a project is still within scope.
49%
Primarily price work on fixed fees
Almost half of agencies we surveyed use fixed-fee pricing. That makes visibility over delivery especially important. The fee may be fixed, but the number of hours a team spends on the work isn't. If scope expands or delivery takes longer than planned, margin starts disappearing unless someone can see it early enough to act.
Source: Magnetic agency benchmarking survey, 104 agencies. Fieldwork conducted in 2019/20230. Respondents were predominantly from small and mid-sized agencies with a median of 20 employees.
Understanding your results
There isn't a universal "good" phantom employee number. The result depends on your margins, pricing, client mix and how deliberately you chose to over-deliver. These ranges are there to help you make sense of your result. The're rules of thumb for professional services firms, not an industry benchmark.
Under 0.3
Probably under control
Some over-delivery is normal. You may deliberately spend a little more time on an important account, help a client through a difficult period or absorb the occasional extra request. At this level, keep an eye on where the hours are going. The main risk is letting a small exception become the normal way the account runs.
0.3 to 0.7
Worth paying attention to
You're now giving away enough time for it to impact margin. At this level, the extra hours are usually spread across the account. More time goes into meetings, revisions, and delivery than was originally allows for, and it becomes part of the normal way the work gets done.
0.7 to 1.2
You're giving away roughly one full-time role
At this level, the problem usually goes beyond one difficult client. This business has often become accustomed to delivering more than was originally sold, and teams start treating extra work as part of the job. Look closely at how work is scoped, how changes are approved and wether account teams have enough visibility to raise the issue early.
Above 1.2
This is now structural
When full-time salaries' worth of work are going unbilled, small efficiency improvements won't solve the problem. Pricing scope and delivery expectations probably need a closer look, particularly when contracts or retainers come up for renewal.
Where unbilled work typically comes from
Unbilled time tends to come from fairly normal parts of client delivery. The problem is that the extra hours are rarely tracked as a separate issue, so they get absorbed into the project or retainer.
Scope creep often changes once the work is already underway. Clients request additional outputs, new stakeholders get involved or something that sounded straightforward turns out to need more work than expected.t
Revision rounds are easy to underestimate when work is scoped. Feedback may come from more people than expected, comments can arrive in stages and later rounds often involved senior team members. If the original estimate assumed two rounds and the work regularly takes three or four, those additional hours have to come from somewhere.
Meetings can take up a significant part of the delivery budget, especially on accounts with several stakeholders. Weekly status calls, internal preparation, client reviews and follow up discussions all need to be included when estimating the real amount of time an account takes to service.
Not every hour worked makes it onto a timesheet. People forget to log short calls, emails, quick pieces of analysis or work done between meetings. Late timesheets also tend to be less accurate because people are reconstructing their week from memory. That means reported project hours can look healthier than the actual amount of time the team has spent.
Small client requests are often handled without much through because they only take a few minutes at a time. Over the course of a retainer, though, those requests can account for a meaningful amount of delivery time. If they happen regularly, they need to be visible in the account data rather than treated as exceptions.
See over-servicing before the retainer is over budget
Magnetic puts scoped and actual hours next to each other on every client and project, so you can see when delivery starts moving away from what was sold.
What over-servicing looks like in different firms
The mechanics aren't quite the same everywhere. Retainer work creates different problems from fixed-fee projects, and businesses that bill by the hour have their own blind spots.
Catching over-servicing while it happens
The calculation is useful, but it's much more useful before the work has already been done. That's where many firms struggle. The account gets reviewed at the end of the month, somebody notices the timesheets are well over budget, or the problem only gets discussed when the client comes up for renewal.
At that point there isn't much to recover.
Magnetic shows the hours originally scoped alongside the hours being logged against the work. Account and delivery teams can see when a project or retainer is using more time than expected without having to wait for a month-end review.
Questions? We have answers.
What is a phantom employee+
It is the full-time equivalent of the unbilled work your team delivers. If your team gives away 1,720 hours of work over a year, that's roughly the working capacity of one full-time person. Calling it a "phantom employee" simply makes that lost capacity easier to picture.
Should I enter my charge-out rate or my cost rate?+
Use your blended charge-out rate. The calculator is showing you the value of work that could have been invoiced. Your internal cost rate answers a different question: how much it costs the business to provide those hours.
My clients are all different sizes, will this still work?+
When does good client service become over-servicing? +
A bit of deliberate extra effort can make commercial sense. You may chose to invest more time in an important relationship, help a client throu
Stop paying salaries for work you never invoice
CRM, projects, resourcing, timesheets and billing run in one system, so scope and actual hours sit side by side from day one.
