A practical framework for measuring client profitability across projects, retainers and support work, and using the result to improve account decisions.
Hourglass Editorial Team
Hourglass · 15 September 2026
A client can generate plenty of revenue and still be a difficult account commercially. A profitable project may be accompanied by unpaid advice, extra reporting, repeated proposal work or a retainer that needs far more attention than planned. Project margin is a useful starting point. To understand the account, you need to look across all the work you do for that client over a defined period.
Quarterly reviews are often frequent enough to support decisions without letting one unusual week dominate. List every project, retainer and support engagement for the client. Add the fees earned in the period, then capture the delivery cost of logged time against each engagement.
If you also want to include account management or sales effort, define that rule consistently. Do not compare one client with allocated presales cost against another without it. Label the result clearly as delivery margin or a broader account contribution, depending on what costs you include.
Client delivery margin is total client revenue minus total delivery cost, divided by total client revenue.
Suppose a client pays £40,000 across two projects and a retainer during a quarter. Delivery cost totals £27,000. The combined delivery margin is 32.5%. If one project earned a strong margin while the retainer absorbed far more hours than planned, the combined figure tells you where to investigate.
Do not average the three project margin percentages. That gives a £2,000 engagement the same weight as a £25,000 one. Add revenue and cost first, then calculate the client-level margin.
Unassigned hours can distort the picture. Look for client calls, small fixes, reporting and "quick questions" that were logged to internal administration or nowhere at all. Decide whether that work is included in a retainer, separately billable or an investment in the relationship. Each answer is valid when it is deliberate and visible.
Check timing as well. A large upfront discovery effort may make one quarter look weak and the next look strong. Review the engagement lifecycle before making a pricing decision from one short period.
Low margin does not automatically mean a client should be dropped. It can point to a retainer allowance that needs resetting, unclear service boundaries, an inefficient handoff, a rate that has not kept pace with the work, or a strategic investment you have consciously chosen to make.
Use the review to choose a specific action: reprice at renewal, define included support more clearly, move recurring requests into a planned workstream, or improve how the team delivers a common task. Then measure the next period using the same rules.
Hourglass provides project profitability and client billing reporting across date ranges, giving account leads a clearer base for this conversation, from individual project margin up to the full reporting suite.
No. Project profitability measures one engagement. Client profitability combines the work and revenue associated with an account over a chosen period.
It can be, especially for a broader account contribution measure. Keep it separate from delivery cost and apply the same method to every client you compare.
Quarterly is a practical cadence for many firms, with an extra review before a major renewal or pricing discussion.
Revenue and delivery cost added up across every engagement for a client, not averaged project by project, so the account-level picture is the one that actually informs pricing and renewal decisions.
Project profitability, utilisation tracking, resource planning — all in one platform built for UK professional services firms.
Get started freeNo credit card required · Setup in minutes