Know what a client really costs
Dividing hours by pay missed most of what it took to serve a client. The true cost changed what the team knew about profit.
The situation
A service company with about $3M in revenue and 30+ employees had fully embraced EOS®. Operations were getting better. Revenue still fell short for months. The company had done an excellent price comparison against its key competitors and understood its differentiators, advantages and disadvantages. But its true cost to deliver was elusive.
The measure
Cost to deliver = the full cost of serving a client, including PTO, training, sick days, the cost to manage each employee, client cancellations, overhead, technology and underutilization, not just hours times pay.
Dividing available hours by employee cost per hour is simple, and it leaves out much of what it costs to deliver. The deeper analysis showed a much higher number of clients each employee needed to break even.
What the team saw
Illustrative chart, not the client's data.
The decision it changed
Knowing the true cost, the leadership team could see how many clients each employee needed to break even and what it would take to make a healthy profit.
How we build this at Next Sage Group
We pull payroll, time, billing and overhead from the systems you already use, build the full cost per client, and show it on your Dashboard beside the Growth Plan.
From Bruce's work before Next Sage Group. Client details are withheld.
Two years later, the company is doing great.