CFO Pricing Myth Busted?
For most of the life of my firm (7 years and counting), I’ve held the belief that: the bigger the client, the higher level of service they need, the more I can charge (as long as I’m providing said services), and the more profit my firm makes.
Because I obsessively track my time, I could also see that as client size (and revenue) grew, so did my “profit per client per hour” (PCH). PCH being one of my main KPIs, calculated:
PCH = Total monthly client profit / hours spent to complete their scope of work
and
Total monthly client profit = Monthly client revenue - software costs - allocated contractor costs
Though, I didn’t have an example in my client roster where I was doing minimal work for a large client…
until last month.
Long story short: April 2025 and the months leading up to it up-ended my largest CFO-level service clients. They had major cashflow concerns, so in an effort to retain the clients through rough times, I offered reduced rates for reduced services. (Read that again: I didn’t say reduced rates for the same services.)
Here’s one example for a client I’ll call “Client X”:
Background context:
Been working with Client X for years (great relationship I want to retain)
2025 was budgeted to be a $2.5M revenue year for them, but will come in closer to $1.4M
Client X was paying me around $5,000 / month for fractional CFO and bookkeeping (forecasting, profitability analysis, labor force analysis, monthly meetings, lots of reporting, etc) through April 2025
Starting May 2025, we reduced scope to bare minimum bookkeeping (no fancy reports, no meetings, no questions answered), which I’m now charging $1,700 / month for
So naturally, you see my monthly profit for that client tank, as expected.
You also see the hours required to complete the work, as expected.
But here’s the interesting part…
When I calculate the new PCH (i.e. the profit I’m getting for each hour of my time spent on that client), it spikes under the new scope and pricing.
I was shocked when I saw this.
Normally, I’m seeing $700-$1,000 PCH on this client with CFO services, but now close to $2,000?
Less total profit per month, yes, but the hours I do work for them, are more profitable, which is always my goal. If I’m going to spend an hour working, it’d better be worth it. Time is my most important resource.
(It’s worth noting here that since this client has been with me for years, I’ve created highly efficient process to complete their books. I also have a bookkeeper that assists on this client, but her costs are included in the profit metric here, so I’m taking her time/cost into consideration already.)
So what does this mean?
It might mean that this client just got more profitable for me on a per hour basis.
It might mean I need to dig more into this, keep an eye on this metric in the coming months, and determine if it’s worth pursuing more bookkeeping clients at this size.
It might mean that I need to reconsider defaulting to CFO services in sales calls with larger clients and ensure I have a solid bookkeeping package to offer them as well.
It might mean those things…but I only have one month of data, so it’s still too early to tell…
Talk soon,
Erica
PS - Want to know how I accumulate this data? Check out the Time Tracking course in Aligned Accountants, then join the Q&A session on June 30th.
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