Customer Profitability Analysis
A sales report ranks clients by revenue and shows the same gross margin for all of them. This template adds what it costs to serve each one, which is where the ranking usually turns upside down.
Cost to serve is built on the second sheet as a rate card: what one processed order costs, one delivery, one hour of support, one handled return, and what a day of payment delay costs at your own cost of capital. These come from dividing a function's cost by the number of events it handles — sales admin payroll over orders processed, and so on. A rough number beats no number, because the differences between clients are large.
The first sheet then multiplies that card by what each client actually consumes. In the sample data the largest client by revenue, at 480,000, places 600 orders, takes 600 deliveries, uses 180 hours of support, sends back 60 items and pays in 95 days. Cost to serve comes to 69,648 and the client finishes at minus 21,648 — the biggest name on the list is the one the others are subsidising.
Across the whole book the gap is the point: 24.5% gross margin in the sales report becomes 14.8% once serving is counted, and the 147,429 in between is overhead that clients consume at very different rates. The last column gives each row a verdict — loss-making, thin, or healthy — so the conversation moves from "our margin is fine" to "this account needs different terms".
Before dropping anyone, the cheap fixes are usually in the drivers rather than the price: fewer and larger orders, deliveries consolidated into set days, payment terms brought back into line. A client is rarely bad; the way they are served usually is. Finmap tracks revenue, direct cost and payment behaviour per client, so this analysis can be refreshed from real data instead of rebuilt by hand each quarter.
