How to Use This Tool
Purpose: measure the true profitability of an individual customer or account by subtracting direct product/service costs, discounts, freight, support, sales effort, returns, credit costs, and allocated servicing costs from customer revenue.
Workflow: enter annual customer revenue and all identifiable customer-specific costs. Review contribution profit, fully loaded customer profit, profit margin, cost-to-serve percentage, and the revenue required to reach a target margin.
Interpretation: high-revenue customers are not always high-profit customers. Excessive discounts, service intensity, returns, small orders, custom work, long payment terms, or high sales/support effort can materially reduce account economics.
| Customer / Account | Prepared By | Analysis Period |
|---|
Customer Profit
$0
Customer Profit Margin
0.0%
Cost to Serve
$0
Revenue Gap to Target Margin
$0
1. Customer Revenue
| Input | Amount | Guidance |
|---|---|---|
| Gross Customer Revenue | Gross billed or booked revenue. | |
| Discounts / Rebates / Credits | Customer-specific concessions. | |
| Returns / Refunds / Allowances | Customer-specific reductions. | |
| Net Customer Revenue | $0 |
2. Direct Cost & Cost-to-Serve Build-Up
| Cost Component | Amount | Guidance |
|---|---|---|
| Product / Service Direct Cost | Direct materials, labor, purchased services, or COGS attributable to customer. | |
| Freight / Delivery / Expedite Cost | Customer-specific logistics cost. | |
| Sales Commission / Account Acquisition Cost | Direct commission or annualized acquisition cost. | |
| Customer Service / Support Cost | Support, technical service, customer success, etc. | |
| Custom Engineering / Setup / Change Cost | Customer-specific customization burden. | |
| Billing / Collection / Credit Administration | Account-specific finance/admin effort. | |
| Bad Debt / Credit Loss | Actual or expected customer credit loss. | |
| Warranty / Rework / Quality Cost | Customer-specific quality cost. | |
| Allocated Account Management / Overhead | Reasonable customer-servicing allocation. | |
| Other Customer-Specific Cost | Document source. | |
| Target Customer Profit Margin % | Optional minimum account profitability threshold. |
3. Customer Profitability Analysis
| Measure | Result | Management Meaning |
|---|---|---|
| Net Customer Revenue | $0 | Gross revenue less discounts, credits, returns, and allowances. |
| Total Customer Cost | $0 | All entered direct and cost-to-serve components. |
| Customer Profit | $0 | Net customer revenue less total customer cost. |
| Customer Profit Margin | 0% | Customer profit divided by net revenue. |
| Cost to Serve % of Revenue | 0% | Total customer cost divided by net revenue. |
| Revenue Required at Current Cost to Reach Target Margin | $0 | Total customer cost divided by 1 minus target margin. |
| Revenue Gap to Target Margin | $0 | Additional revenue required at current cost structure to reach target. |
| Profit Improvement Required to Target | $0 | Profit dollars needed at current revenue to reach target margin. |
Customer Profitability Status: —
4. Management Interpretation & Action
| Question | Management Entry |
|---|---|
| Primary profitability leakage | |
| Pricing / service / terms issue | |
| Required account action | |
| Owner | |
| Due Date |
5. Executive Review & Approval
| Finance Review | Reviewed By | ||
|---|---|---|---|
| Review Date | Comments |
RUBI Business Playbooks / Helping People & Businesses Succeed
Planning and management tool only. Validate payroll burden, benefits, allocations, customer-level revenue and cost attribution, product/service costing, tax treatment, and company-specific profitability thresholds with qualified finance/accounting professionals as appropriate.
Planning and management tool only. Validate payroll burden, benefits, allocations, customer-level revenue and cost attribution, product/service costing, tax treatment, and company-specific profitability thresholds with qualified finance/accounting professionals as appropriate.