This brief captures the 2025 GPS operating profile for the $1M–$2M revenue tier — the band where agencies have moved past owner-only production into a multi-producer structure but haven't yet hit the cost base of the larger tiers. Use it as a sanity check against an acquisition target or against your own agency. Every figure here is a segment benchmark; the companion GPS tier reference explains how the tiers compare.
§ 01 · ProfitabilityProfitability & cost structure.
The tier runs a 10.60% pre-tax margin on a compensation-heavy cost base — two-thirds of every revenue dollar goes to people. The single largest line is office (service) compensation, ahead of both owner and producer pay.
| Metric | Benchmark |
|---|---|
| Pre-tax profit margin | 10.60% |
| Total expense ratio | 89.40% |
| Total compensation (% of revenue) | 67.53% |
| Executive / owner compensation | 20.84% |
| Sales (producer) compensation | 15.72% |
| Office (service) compensation | 23.11% |
| Total administrative expenses | 21.87% |
§ 02 · Revenue mixRevenue mix.
An unusually balanced book: commercial and personal lines sit almost level, and contingent income carries a high 9.44% share — the richest in its peer group, and a line a buyer underwrites carefully because it's carrier-discretionary.
| Line | % of revenue |
|---|---|
| Commercial lines | 40.07% |
| Personal lines | 40.60% |
| Life | 1.80% |
| Health | 6.15% |
| Contingent / bonus | 9.44% |
| Fees | 0.68% |
| Other | 1.27% |
Revenue mix, at a glance.
A near-even commercial / personal split with a meaningful contingent tail. Bar widths are exact percentages of revenue.
§ 03 · Growth & retentionGrowth & retention.
This is the headline. At 12% annual revenue growth, the $1M–$2M band is the fastest-growing GPS tier — and retention across all three product lines holds in the high-80s to low-90s, the profile institutional buyers pay up for.
| Metric | Benchmark |
|---|---|
| Annual revenue growth | 12% |
| Commercial-lines retention | 89% |
| Personal-lines retention | 89% |
| Life & health retention | 92% |
§ 04 · ProductivityProductivity per person.
The tier runs roughly 10.6 staff with 2.5 producers — enough depth that the agency isn't a single-person dependency, which is what de-risks the book in a transaction.
| Metric | Benchmark |
|---|---|
| Revenue per employee | $100,704 |
| Commission per employee | $108,455 |
| Compensation per employee | $82,652 |
| Compensation spread | $39,741 |
| Total staff (average) | 10.6 |
| Producers (average) | 2.5 |
§ 05 · Balance sheetBalance-sheet & book quality.
Clean balance-sheet ratios round out the profile. A 7.62 trust-position ratio and a 9.5-day average receivable age are best-in-class for the band — both signals a buyer reads as a well-run book in diligence.
| Metric | Benchmark |
|---|---|
| Trust position ratio | 7.62 |
| Collection ratio | 0.69 |
| Current ratio | 4.95 |
| Days working capital | 89.6 |
| Average age of receivables | 9.5 days |
- Fastest-growing GPS tier. 12% annual revenue growth — ahead of every other revenue band.
- Balanced book. Commercial (40.07%) and personal (40.60%) lines sit almost level, which spreads carrier and segment risk.
- Rich contingent income. A 9.44% contingent share is the highest in its peer group — strong, but carrier-discretionary and normalized in diligence.
- Best-in-class receivables. A 9.5-day average receivable age and a 0.69 collection ratio point to disciplined billing.
- Solid profitability. A 10.60% pre-tax margin on a 67.53% compensation load.
- Producer depth. ~2.5 producers across ~10.6 staff — enough to mitigate key-person risk in a sale.
The benchmark is the baseline, not the price.
GPS benchmarks don't value an agency — they're the operating baseline a valuation is built on. For the $1M–$2M tier, the figures that move a multiple are revenue growth (12%), three-line retention (89% / 89% / 92%), pre-tax margin (10.60%), and producer depth. An agency at or above these reads as a premium book; one below reads as a discount, and the gap is exactly where a seller's pre-listing work — or a buyer's diligence focus — pays.
One line dominates the normalization bridge in this band: owner compensation at 20.84% of revenue. The add-back between what an owner pays themselves and a market-rate replacement is the largest single adjustment between reported and normalized earnings for the tier. The companion financial & transactional mechanics reference walks the full bridge.
What GPS measures. The Growth & Performance Standards study tracks growth, profitability, and stability across reporting independent agencies, segmented by revenue tier. This brief reflects the $1M–$2M band.
Percentages of revenue. Expense, compensation, and revenue-mix lines are expressed as a percentage of total agency revenue unless a dollar figure is shown.
Benchmarks, not averages-of-extremes. Each figure is the segment's reported standard for the band — the typical well-run agency, not a blend of outliers.
Frequency. The GPS study publishes annually. Milly Books refreshes this brief with each new edition.