How Business Leaders Identify Which Clients or Products Are Quietly Costing Them Money

Why Revenue Alone Tends to Flatter the Numbers

A client or product can look like a strong performer on every report a business reviews most often. Revenue is growing, the account is stable, and nothing signals a problem. The cost of keeping it that way sits somewhere else, in staff time, overhead, support load, or maintenance, and it only shows up once someone loads those costs back into the picture.

Michael Sjolie, CEO of SJOLIE, has described revenue without margin analysis as one of the most expensive stories a founder can tell themselves. He discovered that one of the company’s higher-volume product lines was consuming a disproportionate share of production complexity and customer support resources relative to what it contributed to the bottom line. The revenue looked healthy. The margin, when fully loaded, was not.

Robert Kozub, CEO of Showcare, has described the annual conference as the most common example of a program that looks like an association’s biggest moneymaker. Registration revenue is strong, but the event budget often leaves out the salaries of the staff who spend months producing it. Add those back and the margin can look very different.

The Numbers That Tell the Fuller Story

The leaders here look well past the top line. Sjolie tracks contribution margin per product, the true cost of customer acquisition and retention by segment, return rate and its downstream operational cost, and the hidden overhead absorbed by high-maintenance accounts.

Kozub trusts margin after every real cost. When his team reviews an event with an association, they look at what each registration category costs to deliver and how much staff time the event consumes. A program can grow its top line every year while the cost of serving it quietly grows faster.

Steve Kifer, Manager at Ritzy Room, applies the same logic to furnished units. The numbers that matter are net income per available night once cleaning and maintenance costs are counted, along with vacancy gaps between bookings. Maintenance activity and occupancy trends sit beside revenue in a single view, so a unit with a strong nightly rate and heavy repair traffic shows up for what it is.

When a Client Is Being Subsidized by the Rest of the Business

Matt Benton, CEO and Founder of Real Time Marketing, found that revenue per client masked the real profitability picture until the agency started measuring time investment per account against the returns it generated. A client paying a competitive retainer but requiring three times the strategic attention, revision cycles, and escalation conversations of a comparable account wasn’t profitable. They were a subsidized one, and the subsidy came out of the capacity the team needed to serve everyone else well.

Matt Benton has described a cluster of accounts that generated consistent revenue but consistently needed founder involvement to stay stable. On a revenue report they looked like strong clients. On a time allocation report they consumed resources at a rate that made the relationship unprofitable once fully loaded costs were applied. The confirming signal was when those accounts began affecting the quality of outcomes on adjacent accounts that had never caused a problem.

Kifer points to a similar pattern in property management, where a unit that looks valuable on the surface can quietly cost money. A high nightly rate can hide frequent maintenance calls or costly turnovers, and open-ended vendor billing lets small scope additions pile up unseen. Moving vendors to clear deliverable-based agreements made those costs visible and predictable.

Deciding Whether to Fix, Reprice, or Walk Away

Every leader here starts with a diagnostic question before choosing a response, and the questions are close cousins of each other.

Sjolie asks whether the problem is structural or circumstantial. A product with thin margin due to underpricing is a repricing conversation. A product that is fundamentally expensive to produce and maintain at the required standard is a portfolio decision. A client whose acquisition cost and service demands consistently exceed their lifetime value deserves an honest look regardless of the revenue they represent.

Benton asks whether the cost is driven by a process gap on the agency’s side or a fit problem on the client’s. A process gap is worth fixing because it benefits every account. A fit problem is worth repricing because the extra attention has a real cost the original agreement didn’t reflect. A client whose expectations are structurally incompatible with the delivery model, regardless of process or price, is a relationship worth exiting cleanly.

Kozub follows a similar sequence. If pricing hasn’t kept pace, he reprices, and he encourages revisiting rates every year so a skipped increase doesn’t compound. If a cost is intentional, as with student registrations that usually cost more to serve than they bring in, he attaches a retention plan so the investment in future members actually pays off. Walking away comes last.

Kifer notes that fixing and repricing handle most problems, since operational issues respond to better process and pricing gaps respond to better rates. Walking away is mostly decided at the start. Fewer than 1% of applicant homes are approved, and each one passes a 25-point inspection.

Making the Conversation Easier With Shared Data

The hardest part of acting on any of this is the conversation with the client or owner. The leaders here converge on one practice: put the same numbers in front of both sides.

Benton finds the conversation easier when the reasoning is documented, specific, and framed around what the client actually needs rather than what the agency can no longer absorb. Kifer says an owner who can see occupancy and maintenance figures for themselves agrees on next steps faster. Kozub adds that when walking away becomes the answer, it goes best when both sides are looking at the same numbers, which Showcare’s performance-based partnerships make easier since its own revenue depends on the same results the client cares about.

Carrying an Unprofitable Position Costs More Than Ending It

What these leaders share is a refusal to let a healthy-looking revenue line settle the question. Sjolie notes that these conversations are never comfortable, but they cost far less than carrying unprofitable positions long enough that they constrain the parts of the business that are actually working. The habit worth building is loading every cost back into the picture before deciding which clients and products have earned their place.