INDUSTRIES / CONSULTING FIRMS
Consulting firmsFind the clients who
cost more than they pay
Every consulting firm has at least one. A long-standing client, reliable revenue, everyone assumes they're good business — and once you count the unbilled hours, the scope creep and the meetings nobody logged, they're barely breaking even.
Selling time without
measuring it
Consulting sells hours, but very few firms know what an hour costs to deliver. Salary is the obvious component; the rest is payroll taxes, benefits, software, and the substantial proportion of a consultant's week that is never billable. Loaded properly, the real cost is usually well above what people assume when they set rates.
Without that number, pricing is instinct. Fixed-price and value-based engagements become particularly risky, because the only way to know whether one worked is to compare what you charged against what it genuinely cost to deliver — and most firms cannot produce the second half of that comparison.
Retainers create a separate problem. A monthly retainer is often paid ahead of the work, which makes it deferred revenue rather than income received. More importantly, retainer scope tends to expand quietly over years. The fee stays flat, the work grows, and nobody notices until someone finally measures the hours.
Utilisation is the metric that ties it together. Billable hours against total hours, by person and by team. Most firms have an impression of their utilisation and are wrong about it in one direction or the other, and both errors are expensive — one means overwork, the other means you're carrying capacity you're not selling.
And subcontractors, which most firms use for overflow, need to be costed into project margin rather than sitting in overhead where they distort every project's apparent profitability.
What usually goes wrong
- Fully loaded cost per consultant unknown
- Project margin never calculated after delivery
- Retainer revenue recognised on invoice rather than over the period
- Retainer scope expanded without a fee review
- Non-billable time invisible, so utilisation is guessed
- Subcontractor costs in overhead rather than in project cost
- Write-offs and unbilled time not tracked
Bookkeeping from $299/month · Cleanup from $200 per month behind
Numbers built around
time and projects
What each engagement really costs, what each client really returns, and how much capacity you're actually selling.
Project profitability
Delivered cost against fee, per project and per client. The report that finds the engagements quietly losing money.
Retainer recognition
Monthly retainers recognised over the period they cover, with deferred revenue tracked as a liability.
Utilisation reporting
Billable versus total hours by person and team, so capacity and hiring decisions rest on data.
Subcontractor costing
Contractor spend allocated to the projects it delivered rather than pooled in overhead where it hides.
True hourly cost
Fully loaded cost per consultant including taxes, benefits, software and non-billable time. The basis for every rate you set.
Client profitability
Margin per client across all their work, so renewal and rate conversations happen with evidence.
You'll recognise this if...
None of these mean anything is broken. They mean the books were set up to satisfy a tax return rather than to run a business, which is the normal starting point.
Fixed price feels risky
You quote fixed-fee work cautiously because past projects overran and you never quantified by how much.
Old retainers, old rates
A long-term client is on a fee set years ago and the scope has grown steadily since.
Utilisation is a feeling
You'd estimate your team's billable percentage rather than look it up.
Busy, thin margins
The team is fully booked and the profit line doesn't reflect it.
What visibility
changes
The first finding is usually uncomfortable and valuable: a specific client or engagement type is losing money. Once it's on a page rather than a suspicion, you can reprice it, rescope it, or let it go — all of which are better than continuing to subsidise it.
The second is rate confidence. Knowing your fully loaded cost per hour means you can price fixed-fee work with a margin you chose rather than a margin you hope for.
The third is capacity clarity. Real utilisation figures tell you whether the next hire is justified, or whether the answer is better scheduling of the people you have. Firms tend to be surprised in both directions.
And retainer conversations become straightforward. When you can show a client that the scope has grown thirty percent since the fee was set, the discussion is about facts rather than feelings.
BOOK A FREE CALLEvery client gets
- Replies within 48 hours, guaranteed
- Books closed by the 15th, every month
- Flat monthly pricing, no hourly billing
- A plain-English summary with every report
- The same team every single month
- Cancel any time, files handed over cleanly
Consulting firm accounting questions
Yes. Time tracking data is what makes project profitability possible, so we pull from whichever system you use and reconcile it against the financials monthly.
Then project profitability will be approximate until it improves, and we'll say so rather than presenting soft numbers as hard ones. Usually we start with client-level margin, which is more forgiving, and tighten to project level as tracking improves.
The revenue side is straightforward. The important part is still tracking delivered cost, because value pricing only works if you know your margin — otherwise a well-priced engagement and an overrun look identical in the accounts.
Yes, and most firms have exactly that mix. They're recognised differently and reported separately, so you can see how much of your revenue is genuinely recurring versus won again each quarter.
Worth reviewing. Classification tests apply to consulting subcontractors as much as to any other sector, and firms that use the same contractors heavily over long periods are the ones most likely to have exposure.
Yes, and it's often more useful than client-level reporting for firms offering several distinct services. It's usually where the decision about what to stop selling comes from.
Find out which clients
are worth keeping
Thirty minutes, no pitch. We'll look at how your project costs are tracked, show you what client-level margin would reveal, and quote a flat monthly price.
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