Free editable workbook
Download the Service Profitability Review in Excel.
Use the illustrative inputs, formulas, checks, and decision prompts as a starting point, then replace them with your own business information.
No signup required. Illustrative model only; review assumptions before using the output for a business decision.
Workbook structure
Start Here → Inputs → Profitability → Scenario Summary → What to Consider → Checks. Blue cells are inputs. Formula cells calculate direct labor cost, total direct cost, contribution margin, operating margin, overhead allocation, concentration, scenario changes, and break-even revenue.
Direct answer
How do you know which customers, contracts, or services are actually profitable?
Start with revenue, then connect the labor hours, labor rate, materials, subcontractors, travel, supervision, rework, and other direct costs required to deliver the work. Review contribution margin first, then decide how shared overhead should be allocated before treating the final operating margin as a decision signal.
What the formula-driven model calculates
Contribution margin
Revenue less the direct labor and other costs required to deliver each line of work.
Operating contribution
Contribution margin less an allocated share of common operating overhead.
Concentration risk
Shows whether one customer or service line represents an unusually large share of revenue.
Scenario sensitivity
Tests price/revenue, volume, labor hours, labor rate, and other direct-cost changes under Base, Upside, and Downside cases.
Illustrative portfolio output
| Metric | Illustrative result | What it means |
|---|---|---|
| Total revenue | $645,000 | The period analyzed across the sample customers / service lines. |
| Contribution margin | 30.5% | Margin after direct delivery costs, before shared operating overhead. |
| Operating contribution | $119,350 | Contribution after the sample shared overhead allocation. |
| Operating margin | 18.5% | A portfolio-level result; individual lines vary materially. |
| Downside operating margin | 11.1% | The sample downside case shows why price, volume, labor, and direct-cost assumptions should be stress-tested. |
These are fictional illustrative numbers. The purpose is to show the model logic, not a benchmark for any industry.
What to consider before acting
- True labor cost: are travel, setup, overtime, supervision, training, and non-billable time captured?
- Scope creep and rework: are callbacks and extra visits assigned to the work that caused them?
- Price vs. mix: is the margin issue actually price, customer mix, labor efficiency, material cost, or a one-time event?
- Capacity: if you drop low-margin work, will the freed resources move to better work or simply sit idle?
- Overhead allocation: revenue-based allocation is only a starting point; labor hours, headcount, locations, equipment, or another driver may be more appropriate.
- Cash timing: profitable work can still consume cash when payroll and suppliers are paid before the customer pays.
- Strategic value: routing density, recurring maintenance, referrals, or cross-sell may matter even when a line has lower standalone margin.
Built for different service-business models
The same structure can be adapted for commercial cleaning contracts, HVAC service and maintenance, plumbing and electrical service, refrigeration, generator service, facilities maintenance, equipment service, and other owner-led service businesses. The cost drivers and overhead logic should reflect the actual operating model.
Use the sample
The Excel model includes editable inputs, contribution and operating-margin calculations, Base / Upside / Downside sensitivity, revenue concentration, an illustrative break-even view, a What to Consider page, and model checks.
Illustrative sample only. Replace the inputs and review the assumptions before using the output for a business decision.
Need this built around your business?
I can customize the review around your customers, contracts, job costing, labor structure, overhead allocation, service lines, and management questions. It can be scoped as a defined project or as part of ongoing fractional CFO support.