That client who's so much work: are they making you money or costing it?

Every SMB owner has that one client: pays well on paper, but asks for extra meetings, last-minute changes, "just this once" discounts, and an overdue invoice every month. You feel like you work harder for them than for others paying the same. The problem is you rarely measure it: you decide by gut feeling, not by numbers. Here's a simple way to calculate it.

Why the invoice doesn't tell the whole story

When you only look at the sale amount, all clients look similar. But two clients buying the same thing from you can leave very different profits if one of them consumes:

• More hours from your team (support, adjustments, meetings).
• Discounts or special conditions that erode your margin.
• Longer payment terms, which hit your cash flow.
• Frequent returns, rework, or complaints.

All of that is a cost, even if it never shows up on the invoice. If you don't count it, you end up subsidizing one client with the profit other clients leave you.

How to calculate it, step by step

You don't need a complex system, just honesty with the numbers. For the client you want to evaluate (or 3-4 representative clients, if you want to compare):

1. Add up what they bill you monthly or quarterly. That's your starting point.
2. Subtract the direct cost of what you delivered (product, raw materials, commission, service cost).
3. Estimate the extra time you spend on them beyond what's normal: support hours, emails, meetings, adjustments. Multiply it by an approximate hourly cost for that person (you can use their monthly salary divided by working hours).
4. Deduct discounts or special conditions you gave them that you don't give other clients.
5. Factor in the payment term. A client who pays in 60 days costs you more financially than one who pays cash, even if they buy the same amount.

What's left after all that is a much more realistic picture of what that client actually leaves you.

An illustrative example

Imagine two clients, each buying 5 million a month from you, with a direct cost of 3 million (gross margin of 2 million, 40%).

• Client A pays in 30 days, barely asks for extra support, and doesn't negotiate discounts. Their real margin stays close to that 2 million.
• Client B pays in 60 days, asks for frequent adjustments that take your team about 8 hours a month (say, 400,000 in time) and negotiated an extra 5% discount (250,000 less). Their real margin drops to around 1,350,000: over 30% less than Client A, while buying exactly the same amount.

With those numbers in hand, it's no longer a feeling — it's an informed decision. You might still keep Client B because they bring volume or open doors to other business. But at least you know the real price of that relationship.

What to do with this information

Once you have the full picture, you have several options, not just "firing" the client:

• Adjust terms: renegotiate payment periods or remove discounts that no longer make sense.
• Charge for the extra service: if a client consumes a lot of support, it may be worth charging for that added attention.
• Redirect sales effort: if you've clearly identified type A and type B clients, focus your sales efforts on finding more like A.
• Accept it with eyes open: sometimes an "expensive" client is worth it for reputation or volume. The key is that it's a conscious decision, not a surprise at month's end.

This exercise gets a lot easier when your costs and pre-accounting are organized in one place, instead of rebuilding everything by hand every time you want to review a client.

If you want this clarity without doing spreadsheet math every month, try Miscostosfijos free for 7 days: sign up here.