Not all revenue behaves in the same way. Separate recurring managed-service income from projects, product resale and other non-recurring work. Within recurring revenue, identify contracted commitments, variable consumption and amounts that depend on informal arrangements. This creates a more reliable base for forecasting and makes changes in the client book easier to understand.
Revenue quality also depends on concentration, renewal terms and service fit. A contract may look attractive in isolation but carry risk if it depends on one relationship, includes unclear obligations or requires a delivery model that the rest of the business does not use.
- Which services and client groups produce the strongest contribution after direct delivery costs?
- Where has supplier pricing changed without a corresponding client review?
- Which contracts contain bespoke commitments that create hidden operational effort?
- How much growth comes from new clients, and how much from existing accounts?
- Which discounts remain in place after their original justification has disappeared?
A blended gross-margin figure can conceal weak services and costly accounts. Review margin by service line, package and client segment, using a consistent method for allocating direct labour and supplier costs. The result does not need false precision; it needs to be comparable enough to guide decisions.
When an account is underperforming, diagnose the cause before changing the price. The issue may be excessive support demand, poor standardisation, outdated scope, inefficient delivery or an incorrect cost assumption. Each requires a different response.
Pricing should not live only in the founder’s judgement or an old proposal template. Define who can approve discounts, how exceptions are recorded and when every contract is reviewed. Keep project scope separate from recurring obligations so one does not quietly subsidise the other.
A defensible pricing process includes:
- A documented service scope and clear exclusions.
- Current assumptions for labour, tools and supplier costs.
- A consistent approach to annual reviews and changed requirements.
- A record of concessions and the commercial reason for each one.
- A handover that ensures delivery understands what sales has promised.
Commercial discipline is not about charging the highest possible price. It is about knowing why the price, scope and margin make sense, then applying that reasoning consistently across the client base.
Repeat the review often enough to spot drift early. Small exceptions become structural problems when they are copied into renewals and new proposals without challenge.
