Customer Profitability Analysis: Revenue, Cost to Serve and Decisions worksheet

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Completed reference
Measure	Customer A	Customer B	Customer C	Total
Net revenue	6000	4000	2000	12000
Direct delivery	2400	2000	1200	5600
Support hours	10	20	30	60
Assigned support	400	800	1200	2400
Contribution after support	3200	1200	-400	4000
General overhead	900	600	300	1800
Allocated result	2300	600	-700	2200

Your case

Business / period / source records / assumptions / reviewer / decision / review date

Blank worksheet
Measure	Customer A	Customer B	Customer C	Total
Net revenue	Enter here	Enter here	Enter here	Enter here
Direct delivery	Enter here	Enter here	Enter here	Enter here
Support hours	Enter here	Enter here	Enter here	Enter here
Assigned support	Enter here	Enter here	Enter here	Enter here
Contribution after support	Enter here	Enter here	Enter here	Enter here
General overhead	Enter here	Enter here	Enter here	Enter here
Allocated result	Enter here	Enter here	Enter here	Enter here

Method and controls

Define the period and the cost boundary

Start with a customer-month, quarter or year. Use earned revenue after discounts, credits and returns for that period. Keep collections in a separate dated view: an unpaid invoice can create accounting revenue without available cash. Define whether your result includes acquisition spending, account support, general overhead and owner work.

Customer contribution = net revenue − directly traceable delivery and service costs. Then subtract assigned shared service costs to obtain the specifically defined allocated result. Label the boundary; do not call a partially costed margin company net income. A customer’s lifetime value uses a different horizon and needs retention assumptions.

Reconcile three customers to the business total

Fictional monthly customer ledger
Measure	Customer A	Customer B	Customer C	Total
Net revenue	$6,000	$4,000	$2,000	$12,000
Direct delivery	$2,400	$2,000	$1,200	$5,600
Support hours	10	20	30	60
Support at $40/hour	$400	$800	$1,200	$2,400
Contribution after support	$3,200	$1,200	−$400	$4,000
General overhead allocated	$900	$600	$300	$1,800
Allocated result	$2,300	$600	−$700	$2,200

The support pool is $2,400 divided by 60 practical support hours, giving $40 per hour. General overhead is allocated by revenue only to reconcile the remaining $1,800. Its allocation is a reporting choice, not evidence that the cash disappears when a customer leaves. Total revenue of $12,000 less $5,600 delivery, $2,400 support and $1,800 overhead equals $2,200.