Why hardly anyone calculates it
Because the two figures live in different places. What you billed is in the ERP. What it costs to serve is in technicians’ hours, materials and travel, which are usually in another system or not recorded at all. Without joining them, profitability is a guess.
The five costs to add up
- Logged hours at their hourly cost, including overhead and not just salary.
- Materials and spare parts used.
- Travel and expenses.
- Non-billable admin and support hours.
- The cost of reopened tickets and second visits.
What often shows up the first time
It is common to find that a large customer costs more than it bills, sometimes for years. The renegotiation conversation is uncomfortable, but with the report in front of you it is a conversation about data, not impressions.
The usual mistake
Calculating it only for the customers who “feel off.” It has to be done across the whole customer base: the surprises are where nobody is looking.