How do I calculate profit per client in a service business?
Profit per client is what the client pays you minus the cost of serving them: team hours multiplied by each person's cost per hour, plus direct expenses like freelancers or tools for that client. Track hours per client for a month and compare. PalmGro Flow's time tracking and finance show this per client.
The formula
Client profit = Client revenue − (hours spent × cost per hour) − direct expenses
- Client revenue: what they paid this month.
- Hours spent: by everyone on the team, on that client.
- Cost per hour: salary plus a share of overheads, divided by working hours.
- Direct expenses: freelancers, stock images, tools bought for that client.
Example
A client pays ₹40,000 a month. Your team spends 60 hours on them. Average cost per hour is ₹450. Direct expenses ₹3,000.
Profit = 40,000 − 27,000 − 3,000 = ₹10,000, a 25 percent margin.
What you usually discover
- One or two clients take far more hours than their fee covers.
- Small clients with many revisions are often loss-making.
- Some clients are very profitable and deserve extra attention.
What to do about loss-making clients
- Show the client the scope versus actual requests.
- Reduce revisions or meetings.
- Raise the fee at renewal.
- Part ways politely if nothing changes.
Make it a monthly habit
Even a rough monthly view per client changes decisions on pricing, hiring and which clients to grow. See also time tracking for agencies.
How PalmGro Flow helps
PalmGro Flow tracks time per client, links invoices and payments to each client, and keeps salary data in payroll, so you can see what each client brings and what it costs to serve. The agency growth view shows revenue trends by month.
Questions people ask
What is a good profit margin per client for an agency?
It varies, but many agencies aim for a clear margin after team cost, often 20 to 40 percent. Track yours and raise prices where it is low.
Do I need exact time tracking?
Rough tracking for a month is enough to spot problem clients. Exact tracking helps for hourly billing.
Should overheads be included?
Yes, as part of cost per hour. Otherwise every client looks more profitable than it is.
PalmGro Flow brings your team, clients, tasks, attendance and money into one place, on phone and computer. Try it free, no card needed.Set it up for your team in minutes.