Account Service-Cost Profitability
Is this account still profitable once servicing effort is counted?
This nets out only account manager and recruiter servicing time; it doesn't include one-time acquisition cost or overhead allocation beyond what you enter.
Why this comes up
Account management and recruiter attention aren't free, and they don't scale evenly across accounts, a demanding client with frequent replacement requests and heavy reporting needs consumes real hours that a low-maintenance client of the same size doesn't. This engine subtracts that real servicing cost from a client's economic contribution directly.
How we calculated this
Internal Service Cost = AM Hours x Loaded AM Hourly Cost + Recruiter Hours x Loaded Recruiter Hourly Cost + Other Direct Support Cost Net Contribution After Service = Client Economic Contribution - Internal Service Cost
Worked example: $80,000 client economic contribution, 120 AM hours at $45/hr loaded cost, 40 recruiter hours at $40/hr loaded cost.
Internal Service Cost = 120 x 45 + 40 x 40 = 5,400 + 1,600 = $7,000 Net Contribution After Service = 80,000 - 7,000 = $73,000
What this means
- Even a healthy-looking economic contribution can shrink meaningfully once real servicing hours are counted, in the example, $7,000 of a $80,000 contribution, about 8.75%, goes to servicing alone.
- This is where a client that "looks fine" on gross margin often turns out to be marginal or worse once the real servicing burden is counted, a demanding, high-touch client can consume disproportionate AM and recruiter time relative to its size.
- Track this per account, not just at the portfolio level, since servicing intensity varies enormously client to client even at similar revenue sizes.
Common mistakes
- Allocating AM and recruiter hours evenly across all clients rather than tracking actual hours spent per account, hiding which specific clients are consuming disproportionate servicing time.
- Forgetting other direct support cost (tools, travel, specialized reporting) beyond AM and recruiter hours.
- Treating a positive net contribution after service as automatically healthy, without comparing it against Minimum Profitable Account Size to see if it clears a meaningful bar.
Frequently asked questions
How do I track actual AM and recruiter hours per account?
Time tracking against specific accounts, even approximate, gives far more accurate servicing-cost figures than an even allocation across your whole book.
What if servicing cost consistently exceeds contribution on a specific account?
That account is a net loss once real servicing effort is counted; consider repricing, reducing servicing scope, or walking away, weighed against Client Retention Financial Impact for what losing it would actually cost.
Does this account for one-time acquisition cost?
No, only ongoing servicing time. One-time costs to win the account originally aren't part of this recurring servicing-cost calculation.
Limitations
This only nets out account manager and recruiter servicing time you enter; it doesn't allocate general overhead or one-time acquisition cost. Start with Staffing Client Profitability for the client's economic contribution.
Next decision
Learn more
How to Measure Staffing Client Profitability — servicing effort, payment terms, and credit risk all belong in the real number.