The issue
One of the first profit leaks I remember pricing properly was a service a client was convinced was one of her best offers.
She was charging $3,500 for it. On paper, it looked fine. It was bringing in good revenue, the clients loved it, and she sold it consistently. It was sold out.
Then we priced what it actually cost her to deliver. The freelancers, the contractors and the VAs she was paying. Then everything their invoices left out: her team's time, her own time, revisions, client calls, the software. And the little bits of back-end admin that never appeared against a client, because they were buried in overhead.
By the time we finished, that service was costing her a little over $3,000 to deliver. Before tax.
I remember showing her the number. She looked at me and said:
"Wait. So I'm doing all of that for about four hundred dollars?"
I kind of giggled, and I said yep.
The case before us
The interesting part is that she already knew. The service felt heavy. You know that energy, where you finish a delivery excited but drained. She just couldn't prove why.
That is what a profit leak looks like from the inside. A busy team, happy clients and a very decent revenue, with nothing missing from the bank account. The money went out inside the work, before it could ever arrive as profit.
The claim: your profit disappears into work you have never priced. Until each service carries its full cost, the leak sits in overhead. No monthly report will ever put it in front of you.
Exhibit A: what the invoices leave out
Pricing her offer took two columns.
The first held what she paid other people to deliver it. That column is easy. It arrives as invoices, each with a date and a name on it. You could probably give me the total to the dollar.
The second held everything else the offer used up. Her team's hours, her hours, the revisions, the calls, its share of the software and the admin. None of that arrives as an invoice. It sits in overhead, spread across every client, so it never shows up against the service that caused it.
The first column said the offer was profitable. Both columns together said she kept about $400 a sale.
She ended up repricing the service and tightening what was included, because once she saw she was doing all that work for roughly $400, she couldn't unsee it.
Exhibit B: the cost you absorb
The second kind of leak grows on its own.
Your costs rise in small steps. Inflation. A supplier's new rates. What it costs to get the work to the client. Each step lands on every service you sell. If the price stays where it was, the margin on every one of them gets a little thinner.
Owners, to be fair, tend to absorb the cost. It's usually not an intentional activity. It just kind of happens, and it happens year over year over year.
KeyBank surveyed 1,500 US owners in August, all with revenue under $10 million.
33%.
That is the share absorbing rising costs out of their own paycheck rather than passing them on to customers.
An unpriced cost lands on whoever is paid last. In an owner-run business, that is the owner.
In case no. 005 I followed one dollar through every stop in the month. This is the stop that never sends a bill.
Exhibit C: what I do when my own costs go up
I always need to know what my operational cost is.
When a cost goes up, the first thing I look at is where it hits: operations or admin. Then it's usually twofold. Either I reduce something in my operations, or the customer gets a price increase.
And I always check I'm still making the profit margin I'm targeting, because sometimes when prices go up, the margin doesn't go up with them.
None of that is complicated. It only works because every cost already has a home before I decide who pays for it.
That is what pricing the leak means. Put each cost against the service that causes it. Then decide on purpose who carries it: the client, through the price, or the business, through a cut somewhere else. Your own pay should never be where it lands by default.
In case no. 001 I called this the distance between earned and kept. Her $400 is what that distance looks like for one service.
The verdict
Where exactly is your profit disappearing to each month? Into work you have never priced. It hides in overhead, spread across every client, and every rising cost you absorb makes it bigger. Put the full cost of each service against that service, your own hours included. Then decide on purpose who pays when a cost goes up. In the Profit M.A.P, the framework I use with clients, that is the Profit Leak step.
What to do with this
One service, three numbers.
Take the service you sell the most and write down its price.
Then write down what one sale of it costs you. Count the invoices, plus every hour you and your team put into it, at what those hours cost you.
Take the second number from the first, then divide what is left by the hours.
That is what you are really paid, per hour, to deliver your favourite service.
The sidebar · one number
94%.
That is the share of owners in the same KeyBank survey who could name at least one win this year. The first win the release lists is "keeping prices stable for customers".
A stable price is a kindness to a client. In the same survey, a third of owners were paying for that kindness out of their own paycheck.
Next: case no. 007, on whether you should pay yourself first or last.
P.S. If the second number stalled because you have never priced your own hours, that is the finding. The Profit Scan is my read of your numbers. It shows what each part of the business brings in and costs, and where the profit goes before it reaches you. $297. No call: See where your profit goes
One question, and a one-line answer is all it takes: which of your services feels heaviest to deliver?
Until next Sunday,
Anwin
Anwin Mbah spent 20 years building the systems inside HSBC, Natixis and Zurich that let institutions see their money. A Case for Profit applies that discipline to yours. Wealthfluency is the practice behind it. The Profit Scan is where owners start, at $297, and the Audit and Advisory are what follow.
Know a business owner who wants to make more and keep more? Forward this.