Professional Services Strategy
The Problem
A 40-person consulting firm was winning projects but struggling with inconsistent profitability. Project managers priced work based on instinct rather than a standardized model, often underestimating true labor costs. Invoicing delays and scope creep further eroded margins.
The partners wanted to expand into new markets but knew that without fixing pricing and profitability tracking, growth would only magnify the problem.
The Solution
As their fractional CFO, we:
- Built a dynamic pricing calculator factoring labor rates, overhead allocation, and target margins.
- Implemented project-level P&L reporting in their project management software, enabling real-time visibility for partners and PMs.
- Introduced milestone-based invoicing and standardized contract language to combat scope creep.
- Trained PMs on financial literacy to align operational decisions with profitability goals.
The firm increased average project margins from 22% to 34% and improved cash collections by 12 days on average.
“We knew our pricing was inconsistent, but we didn’t realize how much profit we were leaving on the table until our fractional CFO put the numbers in front of us.”
Conclusion
Systematic pricing discipline and real-time project profitability tracking transformed the firm’s financial performance, enabling confident market expansion.