We Do Not Know Which Products Make Money
in Professional Services

The short answer

Every professional services firm has a service line that partners assume is profitable, and it is usually the one being subsidised through partner compensation. For professional services firms, this shows up in a particular place. The numbers that carry the answer are billable utilisation and realisation, and the complication specific to this industry is that partner compensation rationally pays people not to sell the highest-margin product in the firm. The general version of this problem and the one you are actually in have different first moves.

Engagement-level margin is genuinely hard because most costs such as non-billable time and bench are shared, and the usual allocation by revenue per partner quietly guarantees the answer. Allocating overhead in proportion to revenue per partner makes high-revenue engagements look expensive and low-revenue ones look efficient, which is precisely backwards when the low-revenue work consumes disproportionate partner leverage and realisation effort.

A workable approach tracks only what is genuinely traceable to an engagement such as direct staff costs and leaves the rest unallocated. You end up with contribution by service line and one honest pool of shared cost including utilisation drag, which is far more useful than a fully-absorbed number that nobody trusts.

The result is usually uncomfortable. In most portfolios a minority of service lines carries the whole firm, and at least one long-standing line has been losing money for years with partners assuming otherwise because compensation rewards utilisation over engagement margin.

How to tell this is actually your problem

These three together are the signature. One on its own usually points somewhere else.

✓ Utilisation is quoted as a firm-wide target with no line-of-service breakdown
✓ No service lines have been discontinued despite persistent bench in parts of the practice
✓ Two partners give different realisation rates for the same type of engagement

The move that usually makes it worse. Fully absorbing overhead into every engagement using arbitrary partner leverage ratios, which produces a precise margin built on an arbitrary rule and gets defended because it matches the compensation model.

Who this is for — and who it is not

It is for you if you run or finance a professional services firm and product profitability is quoted as a company-wide gross margin. It is the situation where the numbers are available but nobody has put them in an order that produces a decision.

It is not for you if Percision is the wrong tool if you already know the answer and only need execution capacity, or if the business is pre-revenue — then the constraint is evidence about the market, not analysis of your own figures. Percision is not a lawyer, tax advisor, auditor, licensed appraiser, clinical or regulatory filer, or an AI implementation shop. It does not do HR casework, creative-only brand work, or impersonate a named consulting firm. It is a strategy analysis engine — not a template library. Also wrong if you need facilitation, politics, or someone to sit with a lender or buyer. Those are human jobs.

Percision is not a lawyer, tax advisor, auditor, licensed appraiser, clinical or regulatory filer, or an AI implementation shop. It does not do HR casework, creative-only brand work, or impersonate a named consulting firm. It is a strategy analysis engine — not a template library.

What this looks like when the analysis is actually run

Below is an excerpt from a real run of this analysis on a professional services firm. It is a sample profile rather than a customer, and it is unedited engine output — this is the format you get, on your own numbers.

The subject is Aldergate Partners, a sample company profile used for testing rather than a customer — $88M revenue, 310 people.

This is one move out of a full analysis. Read a complete report — every page, no email required.

What the engine does with this question

This question routes to Matrix Strategy, one of 29 engagements the platform runs. For professional services firms it works through billable utilisation, realisation, revenue per partner and engagement gross margin, then produces the sequence rather than a list of options — which move first, what it funds, and the observation that would say the sequence is wrong.

You watch the analysis get built before paying anything. Read a complete report here if you would rather see the depth first.

Questions people ask about this

Do I need activity-based costing?

Almost never for the decision at hand. Traceable costs plus an unallocated pool gets you the ranking, and the ranking is what you act on. Full ABC is a project that frequently outlives the decision that prompted it.

What about products that support others?

Say so explicitly and price the support. A loss-making line that genuinely pulls profitable revenue is a marketing cost with a name, which is a fine thing to be — as long as somebody decided it.

How often should this be redone?

Annually, and after any significant mix change. The ranking is more stable than the numbers, so the exercise gets cheaper each time.

Is this different in professional services than in other industries?

Materially, yes. Partner compensation rationally pays people not to sell the highest-margin product in the firm — which changes both the diagnosis and the order of the fixes. The metrics that decide it here are billable utilisation, realisation, revenue per partner, and an answer built on industry-general benchmarks will usually point at the wrong one first.

What data do I need before this analysis is worth running for a professional services firm?

Less than most people expect. Your last twelve months of revenue and cost split the way you already split it, plus whatever you hold on billable utilisation and realisation. The analysis is explicit about what it is assuming where your data stops, which is more useful than waiting for numbers you may never have.

When is Percision the wrong tool?

Percision is the wrong tool if you already know the answer and only need execution capacity, or if the business is pre-revenue — then the constraint is evidence about the market, not analysis of your own figures. Percision is not a lawyer, tax advisor, auditor, licensed appraiser, clinical or regulatory filer, or an AI implementation shop. It does not do HR casework, creative-only brand work, or impersonate a named consulting firm. It is a strategy analysis engine — not a template library. Also wrong if you need facilitation, politics, or someone to sit with a lender or buyer. Those are human jobs.

Does Percision replace a lawyer, tax advisor, auditor, or AI implementation team?

Percision is not a lawyer, tax advisor, auditor, licensed appraiser, clinical or regulatory filer, or an AI implementation shop. It does not do HR casework, creative-only brand work, or impersonate a named consulting firm. It is a strategy analysis engine — not a template library.