Question
Not all customers are good customers. Unfortunately, some, regardless of how much you charge for your services, do not add to your net profit. Let's
Not all customers are good customers. Unfortunately, some, regardless of how much you charge for your
services, do not add to your net profit.
Let's look at an example from the service industry:
So, you are the manager at a local CPA firm. You have three large clients, but you are determining if each ofthese clients are creating a profit for your firm, or if one should be eliminated. This is a tough decision to make,and there are lots of pieces of the puzzle to review. Let's look first at the revenue brought in to the firm for eachclient.
Customer A: $25,000.00 in revenue
Customer B: $32,000.00 in revenue
Customer C: $37,500.00 in revenue
You might be looking at this, thinking, "why would we eliminate any of these customers? Look how much
revenue they are bringing in to the firm?" But remember, there are other things we need to consider.
What are some of the things to consider?
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