How to Tell Whether Your Services Are Actually Profitable
Revenue is not profit. Here is a simple way to work out which of your services actually make money—and which quietly cost you.
By Kareem Little
Start with the real numbers
Many freelancers know their monthly revenue but not their profit per service. The two are very different things. A service that brings in the most money can still be your least profitable once you count the hours it takes.
Track your time per service
For two to four weeks, record how long each type of work actually takes, including admin, revisions and client communication. Most people discover their estimates were optimistic.
Work out your effective hourly rate
Divide the fee for each job by the total hours it consumed. Then subtract direct costs such as software, subcontractors or materials. What remains is your effective rate for that service.
Compare and decide
Once you can see each service side by side, the decisions become clearer:
- Raise prices on low-rate services, or stop offering them.
- Package high-rate services so they are easier to sell.
- Fix the delivery process where hours consistently overrun.
You do not need complex accounting to start. A simple spreadsheet and honest time tracking will tell you more than most dashboards.