![]() ![]() In other words, it's a measure of how much revenue you generate from each given client for each hour that you spend working with that client. This KPI shows which customers deliver the highest per-hour value. #Msp accounts that work 2015 softwareThis financial KPI, often called COGS for short, represents the total sum of the labor, material, service and delivery costs that your business incurs directly from delivering its managed services, as well as the costs incurred from overhead expenses such as infrastructure, software, travel, training, and professional service expenses.ĬOGS that grow too high are a sign that you may be operating your business inefficiently, and you can increase profit margins by adjusting the costs of your staffing, software tools, or other expenses. Operating Profit Margin: This margin KPI represents the residual business earnings after subtracting out most fixed costs (such as staff costs, rental expenses, advertising and marketing costs, research and development costs).The net profit margin indicates how much after-tax profit a business makes for every dollar of revenue it generates. Net profit margin: This is a measure of the profitability of a business after accounting for all its total costs.MSPs usually track gross profit margins per revenue source and per service offering: Because not all revenue streams are equal, you should monitor the gross margins of each revenue stream separately to ensure that your services are delivering the profits that you forecast. Gross profit margin: This is the income received from your managed services with the direct costs of providing these services deducted, this excludes indirect business expenses such as marketing costs, office rental, or taxes.There are three types of margins to track: Margin is a measure of the profit that you make on your services.įurther reading Introduction to MSP Profit Margins If your revenue is flat or declining, it's probably because of a failure to align your service offerings with current customer needs, or your sales and marketing efforts are ineffective. Increasing revenue means, firstly, identifying customer needs, and then developing solutions to address these needs and making sure that your sales and marketing team is promoting those solutions effectively. If you're not happy with your current revenue, you can improve it by focusing on the core fundamentals of customer relations, sales, and marketing. Tracking source revenue helps you identify which sources are bringing in the most revenue, and allows you to predict cash flow and assess how well-balanced your overall client portfolio is.įor MSPs, MRR (Monthly Recurring Revenue) is often one of the leading indicators of company success. For example, you get $800,000 annually as your recurring services revenue and your total annual revenue is $1,000,000, then your revenue for that source is $800,000, or 80 percent. Source revenue: This is the proportion of your total revenue that comes from a specific source.A monthly managed services contract that brings in $10,000 represents an income of $10,000 in monthly recurring revenue or $120,000 in annual recurring revenue. Recurring revenue: This is the amount of revenue you bring in regularly through subscriptions (as opposed to one-off projects).(It doesn't reflect the profit you make for more on where profit fits in, see the "margin" section below.)īeyond tracking the revenue as a KPI, you can also track these revenue-related KPIs: In other words, it's how much money you collect from selling your products and services. ![]() ![]() Revenue refers to the total amount of income generated by your company. ![]()
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