Profitability
Which service lines fund the business, and which ride along?
The problem
Businesses expand service offerings for good reasons and rarely go back to measure which ones earn their place.
Why it matters
A low-margin line consumes management attention, labor capacity and cash — the same resources the profitable line needs to grow.
How to know if you have this
- Overhead is allocated evenly regardless of demand on resources
- Some lines exist because a customer once asked
- You cannot rank your lines by contribution margin
- Growth plans treat all revenue as equal
How Advisory Motion solves it
- 01Build contribution margin by service line with defensible overhead allocation
- 02Measure the labor and management load each line demands
- 03Rank lines by contribution per unit of capacity, not by revenue
- 04Decide explicitly: grow, reprice, or retire
Illustrative example
18% of revenue, negative contribution
One line looked meaningful by revenue and lost money after honest allocation. Repricing it recovered margin; the two customers who left were the ones the model said should.
Illustrative composite · not a client identification
Where this connects