- Top-line revenue per client hides real profitability differences underneath it.
- Engagement-level profitability accounts for actual hours worked, not just fees billed.
- The most 'prestigious' clients aren't always the most profitable ones on closer analysis.
- Profitability data should directly inform which new work a firm chooses to pursue.
Revenue alone hides real profitability
Two clients generating identical revenue can have very different profitability once actual hours worked, including unbilled time and scope creep, are factored in. Revenue-only reporting, without a real cost side, gives a misleadingly optimistic picture of which relationships are actually valuable.
Engagement-level analysis reveals the real picture
Breaking profitability down to the individual engagement level — real hours worked against real fees collected — surfaces which specific types of work are genuinely profitable and which are quietly subsidized by others, a distinction that firm-wide averages completely obscure.
Prestige and profitability often don't align
It's a common and uncomfortable discovery that a firm's most prestigious, high-profile clients aren't necessarily its most profitable ones once real time investment is properly accounted for — sometimes quite the opposite, once scope creep and constant availability demands are factored in.
Let profitability data shape what you pursue next
Once a firm has genuine visibility into which engagement types and client profiles are actually profitable, that data should directly inform business development priorities — pursuing more of what's proven profitable, rather than more of what simply sounds impressive.