Pricing and margin analysis
Most owner-managed businesses know their overall margin and cannot tell you which jobs, products or customers produce it. That is the difference between a number and a decision.
This is part of the fractional cfo half of a fractional CFO and controller engagement.
Quick answer: Pricing and margin analysis breaks the business down to the level decisions are actually made at — by job, product line, customer or crew — and shows where money is made and lost. It then tests what a price change, a cost change or dropping a line would do, before you do it.
What it produces
- Margin by the unit you actually sell: job, product, contract, customer or location.
- The cost to serve, including the overhead most businesses never allocate.
- A break-even view, so you know what volume a price change has to hold.
- Price sensitivity tested before it is applied, not discovered afterwards.
- The leak between quote and invoice, which in project work is usually where the margin went.
- A recommendation you can act on, with the reasoning stated so you can disagree with it.
Why the overall margin hides the answer
A business at 30% gross margin overall is rarely at 30% on everything. It is usually at 45% on some work and 12% on other work, and the 12% is often the work that is easiest to win — which is why there is so much of it.
The number that matters is margin after the cost to serve, and that means allocating the overhead nobody allocates: the time spent quoting, the rework, the customer who takes four calls per order. Businesses that skip that step end up growing the wrong line.
What it depends on
This is CFO-half work and it runs on the controller half underneath it. Margin by job needs job costing in the ledger; margin by customer needs revenue coded that way. Where the coding does not exist yet, that is a close and chart of accounts question first, and it is worth fixing before the analysis rather than estimating around it.
Who this is for, and who it is not
A good fit: a business with more than one line, crew, product or location, where the overall margin is known and the mix behind it is not.
Not a fit: a single-service business with one price and one cost, where the arithmetic fits on the back of an envelope and does not need a CPA. We say so on the first call rather than quoting for work you do not need.
Common questions about margin work
How far back do you look?+
We do not have job costing. Can you still do it?+
Is this a one-off or ongoing?+
Will you tell us to raise prices?+
Talk to a CPA about this
One Chartered Professional Accountant, start to finish. Fixed fees, quoted in writing before any work begins, and no obligation from a first conversation.
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