This profitability metric facilitates comparison of companies, offices, departments, and even employees, not by the amount of income but by the profitability percent. It could be the main metric to track for optimal control of the company. The typical profit margin for a professional services organization is in the range from 15% to 25%, while a particular project margin could be from 25% to 50%, and the profit margin for a particular consultant could be from 50% to 400%.
Measurement should be taken over time to compare the current margins to previous ones. Often a profit margin goes down while the company grows fast. Profit margin is the primary metric in the consulting business model. By comparing the planned and actual profit margins, officers can review a company's operational results.
With profit margin measurements, you can:
Know how close the projected delivery was to the estimation
Compare performance of teams
Compare profitability of projects
Compare yourself to industry norms
See the organization's progress over time
Make a relative comparison of the organization's financial performance to the industry average as well as compare companies, offices, and departments between each other.
Here is howMetric.aicalculates the profit margin for the whole company over time with segmentation by client or project.