Account margin isn't just another financial ratio - it's the definitive measure of client relationship health that reveals whether your biggest accounts are propelling your ambitious targets or silently draining the resources needed to scale your impact.

What is account margin in professional services?

Account margin represents the percentage of revenue from a specific client that becomes actual profit after accounting for costs.

Account margin will be of particular interest to account and project managers in your company. This measure helps you figure out which clients are most profitable and which ones might be losing you money.

Here's the reality: If your firm generates $500,000 from a key account and after calculating labor and material costs (etc) has $75,000 in net income from that client, your account margin is 15% (($75,000 ÷ $500,000) × 100). That's 15c profit from every dollar this client generates.

How to calculate your account margin: A step-by-step guide

When calculating account margin, you are solving for the margin of a single account (or client). To do this, you subtract any direct costs associated with the account from the revenue generated by that account.

Calculation: ((account revenue (single account) – direct costs to deliver the work) ÷ account revenue (single account)) × 100 = account margin %

Direct costs are those you incur when delivering a specific project, and may include:

• Consultant wages
• Subcontractor costs
• Material costs (expenses)
• Travel costs (expenses)
• Project-specific tools (e.g. a software purchased to complete the project)

When calculating account margin, each firm decides whether to load in the indirect costs per person here or at the gross margin level.

To load in indirect costs, you’ll need to create a load factor.

Creating a load factor for indirect costs

If your firm chooses to include indirect costs at the account margin level, you'll need to create a load factor. This factor accounts for additional employee costs like payroll taxes and benefits that aren't directly billed to clients.

Payroll taxes and benefits charged to the account would only be for the people who are working directly on the account. In the US, there are person-specific taxes that the employer pays and person-specific costs for benefits, so these are easy to separate out.

By applying a percentage to employee costs, load factors help determine the true cost of each team member working on client projects.

You may not be aware that there can be different levels of load.

• Basic - payroll taxes, benefits, PTO/leave
• More advanced - training time, practice development (e.g. interviewing to build the firm)

Calculate your account margin now

Stop hiding from your true client profitability. Use our free, interactive account margin calculator to get immediate insight into your firm's client relationships and identify opportunities to improve your project revenue and profit margin.

Our calculator helps professional services firms:

• Instantly determine client-specific profitability expressed as a percentage
• Identify opportunities to optimize pricing and resource allocation

Why account margin matters for high-achieving US consulting firms

Account margin is a fundamental metric that separates rapidly-growing specialist consultancies from those constantly fighting for survival by idenitfying unprofitable client relationships.

The complex, high-stakes problems consulting firms tackle today - from structural engineering challenges to innovative software projects - demand exceptional talent commanding premium rates. 

Your experts' specialized knowledge is too valuable to waste on unprofitable client relationships where project bloat silently erodes margins. Projectworks spots these warning signs before they become project hell, ensuring your team's expertise drives substantial bottom-line growth rather than disappearing into runaway costs.

When you track account margin, you immediately unlock the potential to:

• Identify which flagship clients deserve expanded investment and which are secretly limiting your scale
• Make data-driven decisions that transform pricing strategies for optimal margins
• Build aggressive yet achievable growth forecasts that attract top talent and investment
• Establish clear profit margin targets compared to industry benchmarks
• Demonstrate financial strength to potential investors, partners, and acquisition targets
• Build high performance project teams at scale

Account margin vs. gross margin: Know the difference

In contrast to account margin, which calculates margin per account, gross margin calculates the margin across all accounts in your client portfolio.

Gross margin is a good indicator of the overall health of your client work. If your gross margin is strong, then scaling your business is worth investment in sales and marketing.

It's worth tracking margin at the account level, because it reveals which client relationships drain your firm's resources.

Transform your profitability from guesswork to an unstoppable growth engine

If your specialist consulting firm is going to solve the complex problems only your unique expertise can tackle, profitability can't be optional - it must be your foundation. Superior account margins don't just fund today's projects; they finance your firm's future through deeper bench strength and the runway needed to say no to the wrong work and yes to the right clients at premium rates.

Projectworks turns your financial data into real-time project intelligence, delivered to the right people at exactly the right time. With instant insights, your key stakeholders can make decisive course corrections before scope creep and resource crunches erode profits, ensuring every client relationship delivers its full potential.

Ready to make financial insights your competitive advantage? Book a demo to discover how Projectworks helps successful consultancies track and improve their margins, optimize their resourcing, and build the financial foundation needed for dramatic market expansion.

Looking for more insights on profitability metrics? Read our comprehensive guide on How to Calculate Your Margin.