A client can pay the same monthly fee for years while the work around it keeps growing. More questions reach the partner, records need more cleanup, and the engagement takes a larger share of the team’s week.
A client-profitability review gives you evidence for a different fee, scope or way of delivering the work, and helps you judge when a client no longer fits.
What the same monthly fee can hide
Harbour Joinery supplies organised records and brings its questions to one review. Riverside Physio needs repeated follow-ups, more cleanup and more of the partner’s time. Both pay $2,000 a month for bookkeeping.
Bookkeeper time is costed at $45 an hour and partner review at $75, with shared overhead allocated at $15 per client hour.
| Monthly measure | Harbour Joinery | Riverside Physio |
|---|---|---|
| Fees | $2,000 | $2,000 |
| Total client hours | 12 | 30 |
| Partner hours | 2 | 8 |
| Effective hourly revenue | $166.67 | $66.67 |
| Labour cost | $600 | $1,590 |
| Direct expenses | $100 | $100 |
| Contribution before shared overhead | $1,300 / 65% | $310 / 15.5% |
| Allocated shared overhead | $180 | $450 |
| Estimated profit after overhead | $1,120 | −$140 |
| Estimated margin after overhead | 56% | −7% |
Riverside’s 30 hours need unpacking before the next fee discussion. How much belongs to the service you agreed to provide, and how much has accumulated around it?
Which clients are worth reviewing first?
Start with the engagements most likely to have drifted: fees that haven’t changed across several renewals, cleanup that recurs every month and growing demands on partner review. Those are the clients where the fee and the work have had the most time to separate.
What belongs in the comparison
The comparison is only as reliable as the hours behind it. Partner review, client calls and time spent chasing records are often where the gap between Harbour and Riverside sits, and they’re the hours least likely to be recorded on fixed-fee work, where nobody invoices from the timesheet. When the team tracks time against each client as it works, including uncharged client work, Riverside’s 30 hours come from records rather than recollection. A report of hours by client and person, exported to CSV, gives you the figures for the worksheet’s Labour detail.
A monthly view works for steady bookkeeping; annual accounts or seasonal tax work may need a full service cycle.
Cost each person’s hours at employment cost, not charge-out rate, spread over the hours they actually spend on client work. Once leave, training and internal work come out, a bookkeeper paid for 2,080 hours a year might deliver 1,300 to clients, which lifts their hourly cost by 60%. The Cost rates sheet works this out from annual figures.
If you do all the work yourself, you can use one hourly cost for your time across both clients. What you’d pay someone to do comparable work gives you a starting point.
Shared overhead covers rent, software, admin support and other costs that aren’t already in labour or direct expenses. A year’s shared costs divided by the year’s client-delivery hours gives the per-hour rate.
What would need to change for Riverside?
At a 30% target margin after allocated overhead, Riverside would need a monthly fee of about $3,057 at its current costs. Keeping the fee at $2,000 would leave room for about 19 hours at the same labour mix and direct expenses. Thirty per cent is this example’s target; yours should reflect the profit the practice needs after paying for everyone’s time, including the owners’.
When the fee has fallen behind the service
If Riverside needs that cleanup and support as part of its ongoing service, a revised monthly bookkeeping fee can reflect the work involved. If the cleanup is a one-off, quote it separately rather than building it into the monthly fee for good.
When the work needs a different agreement
A 19-hour scenario is only useful if you can identify which 11 hours would change. For Riverside, that means agreeing changes to the scope: records prepared to an agreed standard, and one consolidated review round in place of repeated follow-ups.
When the problem is how the work gets done
Some of Riverside’s hours may be the practice’s own: queries escalated because nobody agreed what needs partner sign-off, or corrections after review. A fee increase won’t fix those.
If a bookkeeper took on five of Riverside’s eight partner hours, with partner review at an agreed point, labour cost would fall by $150 a month at these rates. That brings Riverside to about break-even after overhead and returns five partner hours a month to work that needs them.
If you do the work yourself, check for gaps in the records before you start so you can send one request and avoid reopening the job several times.
When releasing capacity is worth considering
Riverside contributes $310 a month after labour and direct expenses. If you do the work yourself, the immediate cash impact of ending the engagement is the fee you give up, less any expenses you can stop paying. The 30 hours you get back might make room for a better engagement or ease an unsustainable workload.
How to tell whether the changes are working
For steady engagements, a quarterly review can catch drift before the next annual renewal. Broad categories such as production, review and client support show whether repeated reviews are falling or partner input is increasing.
MinuteDock’s client and project reports bring together hours by client, person and work category, including the time behind fixed-fee and value-priced work. Set against your cost rates, the next quarter’s figures show whether a new fee, scope or way of working has improved the return.
For Riverside, the test is whether the return now justifies the work and capacity it takes. A higher fee, fewer follow-ups or less partner time can each move it, and the next review shows which did.
