Contribution

Gross margin per account minus cost to serve. Ranked, it shows the large accounts that earn least and the components, drops, returns, lines, that a conversation can change.

DefinitionGross margin per account minus cost to serve. Ranked, it shows the large accounts that earn least and the components, drops, returns, lines, that a conversation can change.

Identity

Account gross margins sum to the ledger's gross margin. A line without a cost fails it and the account is marked incomplete.

Levers, not exits

A large low-contribution account is fixed with fewer drops, a minimum order or a returns policy, rarely dropped.

How it is computed

Gross margin per account minus cost to serve, ranked in currency. The ratio of cost to serve to gross margin is shown beside it; above 100 percent the account loses money as served.

Example

Account A earns $68,000 on $400,000 of revenue. Account C loses $1,262 on $12,000, despite the best gross margin percentage in the book.

Where it goes wrong

Ranking by percentage. A small account at 25 percent is $2,000; a large one at 15 is $59,000.

Articles that use this term

Board and management reporting

A board narrative with a citation on every number: how to draft the commercial pack from reconciled figures

A method for writing the quarterly commercial narrative so every figure carries a citation to the calculation that produced it: the reconciled roll-up as the source, the narrative structure, the citation format that survives export, and why the model writes sentences but never numbers.

16 Sept 20263 min read Board and management reporting

Cost to serve by industry: what the account costs beyond the goods, on twelve desks

Cost to serve is what it takes to serve an account beyond the product, and what that is differs by desk: drops and returns for a distributor, adviser hours for a wealth firm, support tickets for a SaaS company, pursuit hours for a consultancy, detention charges for a forwarder. This hub gives, for twelve industries, the cost components, the rate each is stated at, the source, and the measure it feeds, with the guide for each.

16 Sept 20263 min read Data quality and reconciliation

Currency and multi-entity roll-ups: one identity across several ledgers

How a company with several legal entities and currencies builds one commercial roll-up that still reconciles: the entity as a level above region, one reporting currency at stated rates per period, the rule that conversion happens once at the entity ledger and never in the report, constant-currency comparisons beside reported ones, intercompany revenue excluded by rule, and the identity that the sum of entities in reporting currency equals the consolidated figure.

16 Sept 20262 min read Board and management reporting

Customer lifetime value from the ledger: the honest version

How to compute customer lifetime value from data a B2B company actually holds: contribution per year per customer from the ledger and cost to serve, expected remaining life from the company's own churn by segment and tenure, and the two together, with the range rather than a point, the identity that ties it to the ledger, and the four assumptions that turn an honest figure into a marketing one.

16 Sept 20263 min read Board and management reporting · Distributors

Margin by account: the accounts that buy the most and earn the least

How a distributor computes gross margin per account from invoice lines and cost, adds the cost to serve from delivery and returns, ranks accounts by margin rather than revenue, and finds the large accounts whose price agreements, delivery frequency and returns leave less than the small ones, with the identity that ties the account margins to the ledger.

16 Sept 20262 min read Territory, capacity and quota planning · Distributors

Order size and drop frequency: the accounts that could take half the deliveries

How a distributor finds the accounts whose delivery frequency is out of proportion to their order size, from the delivery log and the invoice lines: drops per week against value per drop, the norm from accounts of the same size and type, the accounts on daily drops that similar accounts serve twice a week, the cost of the extra drops, and the offer that consolidates without losing the account.

16 Sept 20262 min read