Profitability solution
The hardest part of profitability is accepting that some of your most popular services make no money. In this solution we calculate the profit of each service or product separately — direct cost, share of fixed cost, variable cost and team time — and then build the pricing structure and the sales packages.
This solution is for you if…
- Revenue is high, but nothing stays in the account and cash keeps burning.
- You do not know the margin of each service or product.
- Discounting has become the main way to close sales.
- Prices were last aligned with the market, not with cost.
- Fixed costs have risen and the break-even point is unknown.
- One of your popular services earns you nothing.
- Team time has never been part of your pricing.
What we measure
| How it is calculated | Warning threshold | |
|---|---|---|
| Margin per service | Selling price − direct cost and overhead. | A service whose margin is low relative to total revenue means you are working with your money, not earning on it. |
| Margin percentage | Margin per service ÷ selling price × 100. | Varies by industry and competitors. |
| Monthly profit per service | Margin per service × units sold per month. | The most popular service or product can still be a small share of profit. |
| Monthly break-even | Monthly fixed cost ÷ profit per service. | If that number is large and unstable. |
| Profit concentration | Share of your top three services in total profit. | If one service carries over 40% of profit, you carry concentration risk. |
Margin calculator
Enter price, direct cost and team hours to see the real margin per service.
How we work
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Service, price and cost list Duration: Half a day
Every service is reviewed with its quoted price, direct cost and time required.
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Margin per service Duration: One week
Each margin is calculated including team time and a share of fixed cost.
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Findings session Duration: 90 minutes
You see which service earns, which loses and where prices must move.
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Pricing and sales packages Duration: One week
New prices and packages are prepared and their profit effect is modelled.
Requirements
- Current price list plus the actual selling price after discounts
- Invoices from the last three months
- Direct cost per service (materials, fees, commissions)
- Monthly fixed costs: rent, salaries, subscriptions, instalments
- Approximate time per service in minutes or hours
Worked example (illustrative numbers)
How an unprofitable service is found
The point: the most in-demand service is not always the most profitable. The last three generate sales on paper and reduce profit in reality.
- A service quoted at 5,000,000 with direct cost of 1,800,000 and three team hours.
- At an hourly team cost of 250,000 the real cost is 4,300,000; margin is only 700,000 (14%).
- The same service was the best seller; on paper it looked like growth, in reality it pressured cash.
Until team time is priced in, some services only waste time. Adding up direct costs is not enough; the share of variable cost and fixed cost must be counted too.
Not sure which service actually earns?
Book a consultation; with the numbers you already have I will tell you where the profit is leaking.
Four common mistakes in profitability
- Pricing by watching competitors: their price does not know your cost.
- Discounting for everyone: a discount should be an exception, not your standard way to close.
- Ignoring team time: your time and your team's time are real costs, even when uninvoiced.
- Selling low-margin services for market share: more share with less profit is just busier.
What you get
- Margin per service, with numbers.
- A new price structure and packaging ready to announce.
- A list of hidden costs and a plan to reduce them.
- Your monthly break-even point.
- Two numbers to track: margin percentage and monthly profit.
Tools applied
- Margin per service analysis and service mix matrix
- Break-even analysis with fixed and variable cost structure
- Value-based and cost-based pricing
- Service packaging at several levels
Frequently asked questions
How long does it take?
Three to four weeks, because margin per service needs real sales and cost data.
How much should I raise prices?
I do not name a number before the analysis. Each service is priced on cost, value and market response, and often a few services need adjustment rather than a blanket increase.
What if I do not have accurate financial data?
We start with what exists: invoices, the price list and time estimates. Missing data is itself a finding that appears in the report.
Do you guarantee higher profit?
No numerical guarantee; my guarantee is method and transparency. Every calculation backed by a document, and if data is missing I say so.
Which business is this for?
Any business with several services or products that does not know the real margin of each.
Where do I start?
Use the free initial checkup, then a short call to decide whether this solution fits you.