Service 02 / Profitability analysis
Look beyond the headline revenue.
Two sales with the same revenue can have very different economics. Delivery requirements, service time, discounts and product mix all affect the contribution left to support the business.
What is growth actually contributing?
Make the numbers comparable
Agree consistent definitions for sales, direct costs and contribution. Identify one-off items, returns and missing costs so comparisons across products or periods are meaningful.
Explore what sits underneath
Review customer groups, product lines and channels. Where useful, add a clearly labelled estimate of the effort involved in serving each group. Avoid presenting allocated costs as precise facts when the evidence is limited.
Turn findings into priorities
Distinguish issues that need a price review from those that need a different service model, clearer terms or a closer look at the product mix. Focus reporting on decisions that somebody can act on.
What a scoped engagement can include
- A contribution view by product, customer or channel
- An explanation of major performance movements
- Visible assumptions and data-quality limitations
- A prioritised list of commercial questions and actions
Deliverables depend on the agreed scope and available information.
What to bring to the first conversation
Useful starting information includes sales by product or customer, direct costs, returns, freight and a description of service activities. A sample period can establish a workable first view.
A clearer next step
Let’s start with
your business question.
Pricing, margins or your next commercial move.
Bring the question. We’ll discuss the starting point.