How to analyze margin by client

The problem

You know how much each client bills you. It's two clicks away in your system.

But how much does each client earn you? That's a different number. And almost nobody has it to hand.

The risk: the client that keeps you busiest is also the one that leaves the least in your pocket — and you find out at year-end, when the job is already closed.

Revenue is not margin

The contribution margin per client is what's left after you subtract the costs that client makes you incur: people's hours, direct costs, extras.

Two clients with the same revenue can have opposite margins. What makes the difference is how much time they absorb, at what rate, with how many reworks.

To read it you need two axes:

• How much each client bills in the month.
• How much margin they leave, as a percentage.

The rest is size: how many hours they cost you. A big client running at a loss is the most expensive problem you have.

See it here

This is the same view, on sample data. Each dot is a client. The bigger it is, the more hours it absorbs. Profitable clients sit up top, losing ones at the bottom.

Look for the dot that's black, near the bottom: that's the outlier client. Click it.

That client absorbs almost 40% of the month's hours and returns −2% (−€170 of margin). On its own it eats the margin of everyone else.

The point isn't to drop them. It's to know — while you can still renegotiate the rate, cut the reworks, or change the work mix.

Do it on your data

On the sample chart it's obvious. On your clients, with your numbers, that's where something changes.

Want to see margin by client on your real data? Discover LoomX Tracker — hours become margin, in real time — or let's talk: 30 minutes, no sales follow-up.

Read also: I discovered my best client was losing me money and Contribution margin: what it is and why it's more useful than gross margin.