Client Profitability

Definition

A measure of the net financial contribution a single client makes to a CPA firm after accounting for all direct and indirect costs associated with serving that client, including staff time, overhead, and administrative burden. High-revenue clients are not always the most profitable if they generate disproportionate overhead, scope creep, or compliance risk. Analyzing client profitability helps firm owners make strategic decisions about which relationships to grow, reprice, or terminate.