Why do profitable services sometimes get considered for cutting?

Because without effort-based profitability data, a service can look unremarkable or even burdensome on the surface — low revenue, feels like admin — while actually generating strong margin relative to the small amount of time it requires. Revenue alone hides that.

How can a firm find its most profitable service?

By comparing profit, not revenue, across services — accounting for the actual staff time each one requires to deliver. This often reveals surprises in both directions: high-revenue services that barely break even, and modest-revenue services that are quietly the most valuable in the practice.

Does this mean every firm has a hidden profitable service?

Not necessarily every firm, but it's common enough to be worth checking. The pattern tends to show up in services delivered informally, or bundled in without a clear separate fee, because those are the ones least likely to have ever been reviewed on their own.

The Service She Almost Cut: Seeing Service Profitability for the First Time

She'd been running her practice for eleven years. If you run a fixed-fee accounting practice in Australia, you've probably never done what she did last month.

What she actually looked at

She sat down and looked — properly looked — at profitability by service, not just by client. Not revenue by service. Profit by service, once staff effort was accounted for. She'd simply never looked at it that way before. Revenue was healthy. The firm was busy. Clients seemed happy. There was no obvious reason to go looking for a problem.

The compliance work looked roughly how she expected — steady margins, predictable effort, nothing surprising. Then she got to the advisory services: the cash flow reviews, the management reporting, the odd strategic session she ran for a handful of clients. That's where it got interesting.

The service she'd almost stopped offering

One service — a monthly management reporting package she'd almost stopped offering the year before because it "didn't seem worth the admin" — was generating a disproportionate share of the firm's total margin. From a small number of clients. For a service she personally delivered in under two hours a month, per client. She sat with that for a while.

The service quietly funding a loss

Then she looked at a different service — a compliance add-on she'd offered for years, bundled into most engagements almost by default. It was costing more in staff time to deliver than the fee recovered. Every client. Every year. She'd been quietly funding it with margin from elsewhere in the practice, without ever having decided to.

Nobody had done anything wrong. The pricing had made sense when it was set. The team had delivered good work throughout. But nobody had ever looked at the two services side by side, with actual effort attached to actual fees — so the picture had simply never existed, until it did.

What she did with what she saw

She didn't overhaul the firm that afternoon. She didn't need to. She just finally knew two things clearly: which service to do more of, and which one needed a very different conversation.

That's usually where it starts. Not with a plan. With a moment of actually seeing it, for the first time — and from there, the decisions that follow tend to be much smaller and much more obvious than the discovery itself.

Why this matters for the compliance-to-advisory conversation

A lot of firms talk about "moving into advisory" as a strategic pivot — a new division, a new pitch, a new pricing model to build from scratch. Her experience suggests something more useful: the advisory work worth doing more of might already be sitting inside the practice, quietly outperforming everything else, waiting to be noticed rather than invented.

The question worth sitting with

Which service in your practice would surprise you most if you looked at profitability after effort was accounted for?