Profit is the difference between the amount earned and the amount spent. In a consulting business, earnings are usually revenue from projects while spendings are the cost of delivering these projects—salaries of consultants and overhead (non-project-related expenditures).
Without profits, consulting companies could not invest money in marketing, sales, training, services engineering, and knowledge management. Consulting businesses without profits are more like self-employment or nonprofit organizations. A typical profit margin for a consulting firm is in the range of 15%–25%.
Measurements should be performed over time by project, department, and employee. This will enable you to answer the following questions:
- Who are my most profitable customers?
- What projects are the most profitable?
- What type of project is the least profitable?
- On which parts of a long-term project do I make the most money?
There are multiple types of profit in Metric.ai:
Recognized Profit = Recognized Revenue - Recognized Cost
Planned profit comes from Allocations (can be imported from a resource scheduling tool like Float via integration or internal resource allocation functionality in Metric.ai) and their potential profit and planned cost.
Planned Profit = Planned Revenue - Planned Cost
Forecasted profit consists of recognized (logged) profit before today and planned profit after today.
In Metric.ai, there is a separate metric view for the Profit per hour. It’s used to determine how much money an organization or a given expert or team is earning on a per-hour basis.
Hourly metrics help to evaluate your hourly rates and overall financial performance.
To learn more about the analytics view of Metric.ai, please read Analytics overview help documentation.