Customer revenue is easy to rank. Customer profitability requires a clearer picture of what it takes to deliver and maintain the relationship.
Start with a defined period and a consistent method. The result is a management estimate whose usefulness depends on the quality of the inputs.
Separate direct costs from allocations
Identify revenue for the period and costs directly attributable to the account, such as materials, external delivery expenses and relevant service labor. Avoid subtracting the same labor cost twice through both direct costing and an overhead allocation.
Shared expenses need an allocation method if you want a fuller estimate. State that method and its limits. Allocating rent by revenue does not mean a specific customer caused that share of the rent.
Include service effort
In an illustrative account, $5,000 of monthly revenue less $2,000 of external costs and $1,500 of attributed delivery labor leaves $1,500 before other relevant costs and shared overhead. It is not automatically the account's net profit.
Track recurring support, exception handling and rework where practical. Distinguish temporary onboarding from ongoing demand so a new account is not judged as if its first month were normal.
Use the estimate to ask better questions
A low contribution can reflect pricing, scope, inefficient delivery or a strategic investment in a developing relationship. Those explanations imply different actions.
Check sensitivity: does the conclusion change materially if the labor estimate is off by a few hours? If so, gather better information before making a large decision.