Personal Introduction
From 2008 to 2014, I worked with Prakash Parab in waste management at Dulsco: first as a customer, later as a colleague in the role of Commercial Director, and subsequently as a senior-level freelance consultant. His current article series covers the staffing business. Chapter 10 focuses on the profitability of individual customer relationships.
Summary of the Original
Prakash Parab explains why a positive overall business result can mask unprofitable customer relationships. He recommends calculating profitability on a per-customer basis, taking into account not only direct personnel costs but also the actual support effort required.
This includes, for example, management time, customized reports, on-site meetings, and escalations. Long payment terms also create additional capital requirements. As a result, an initially attractive margin may turn out to be significantly smaller.
Parab recommends regular customer reviews. For contracts that are financially problematic, price adjustments, changes to service and payment terms, or an orderly contract termination may be considered. At the same time, the analysis shows which customer relationships should be specifically developed further.
Jan Wilhelm's Own Practical Assessment
For service companies, the practical question is: What is actually left after fully supporting a customer?
A hypothetical example: Two customers each generate 8,000 euros in monthly revenue. One requires standardized services and few follow-up questions. The other requires additional coordination, special reports, and repeated invoice corrections. Identical revenue means a different contribution to profit here.
A sensible start is to record these additional costs monthly for selected customers. The prerequisites are traceable allocations and uniform evaluation rules. The results then form the basis for concrete conversations about scope of services, processes, and prices.
ELB Services supports you in combining customer and order evaluations with clear commercial processes – so that growth also remains economically sustainable.
Original article by Prakash Parab:
Customer-Wise Profitability: Knowing Which Clients Earn Their Keep
Website and series overview:
www.prakashparab.com
Original read on October 24, 2026. Independent editorial summary and recommendation by Jan Wilhelm; no authorized translation or joint publication.