A company with an 18% overall margin does not have 18% margin on every client. It typically has clients at 35%, clients at 8%, and one or two running at a loss nobody spotted because nobody ever looked at them separately.
Finding out which is which does not require an ERP. It requires an afternoon and the discipline not to round in favour of the answer you want to hear.
The minimum defensible calculation
For each relevant client — the ones that make up most of your revenue — gather three figures:
- Revenue for the period, excluding VAT.
- Direct costs: materials, subcontracting, travel, licences specific to that client.
- Dedicated team hours, valued at real hourly cost, not gross salary divided by 160.
Real hourly cost includes the 23.75% employer social tax, work-accident insurance and the fourteen-payment structure. An employee on €1,500 does not cost €9 an hour; it costs close to €15, and that is the number that has to go into the sum.
The costs that always get left out
They are almost always the same ones, and they are the ones that flip the result:
- Time spent managing the relationship. The client who calls three times a week eats hours nobody invoices or logs.
- Rework. Out-of-scope changes accepted to keep the relationship smooth.
- The cost of financing the delay. A client who pays at 90 days has a real financing cost. If the company funds itself at 7% a year, 60 days of delay on €50,000 costs around €580.
- Administrative cost. The client who requires their own portal, purchase orders and split invoicing eats operations hours that are not in the price.
What to do with the result
Three groups almost always emerge, and the right action differs for each:
High margin, stable relationship. Protect it. Understand why it works and replicate it on other accounts.
Low margin from inefficiency. The price is right, the process is what's expensive. Fix it on the operations side, not the price.
Low margin from price. No efficiency gain fixes this one. Either the price rises at the next renewal, the scope shrinks, or you knowingly accept it as a positioning client — which is legitimate, as long as it is a decision and not an accident.
Twice a year is enough
This is not a monthly indicator. Done carefully twice a year, it changes pricing, hiring and sales-focus decisions. Done in a rush every month, it generates noise nobody trusts.
What should be monthly are the operational indicators — average collection period, overdue amounts, projected cash flow. Margin per client is a strategic decision, not an operational alert.