What It Takes to Serve a Client
Cost to serve is everything a client costs you beyond the job price. It includes unbilled hours, free extras, and absorbed costs. A client can look profitable on an invoice and still cost you money.
What it means
The price on an invoice is only one side of the ledger. The other side is every hour and cost that never reached that invoice. Examples are a call to check on progress or a small extra thrown in free. Another is a part replaced without a charge. None of it shows unless you add it up on purpose.
Cost to serve is no reason to distrust every client. Most cost very little beyond the job itself. It helps you find the few clients where the gap is large. For those clients you may change what you charge, or decide whether to keep taking their work.
A client’s jobs total $3,000 for the year. Add up the unbilled calls, two free revisits, and a part you absorbed. The real cost to serve that client is closer to $3,800 worth of your time and money, for $3,000 in.
Judging a client only by what they pay. A high-paying client with constant unbilled extras can be worth less than a smaller, simpler one.
See also
Where this shows up
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