The Contract Profitability App offers in-depth insights into the financial performance of client contracts. It enables Managed Service Providers (MSPs) to track profitability trends, analyze cost breakdowns, and identify underperforming contracts. This app helps decision-makers and finance managers maximize revenue, reduce inefficiencies, and validate the ROIs of contracts.
By combining billing, actions, and items data, the app offers a comprehensive view of profit margins, effective rates, and contribution rates over time and across clients.
Key Features and Benefits
- Track Contract Profitability Trends: Visualize monthly trends in Profit Margin, Effective Rate, and Contribution Rate to understand overall performance.
- Client-level Analysis: Use heatmaps to quickly spot underperforming accounts, filtering by company, contract type, or contract category.
- Detailed Profitability Views: Drill into profitability by client or contract for in-depth insights.
- Break Down Costs and Revenue: Compare labor efficiency and product billing activity to assess contract value.
Prerequisites
Before using the Contract Profitability App, ensure you have the following:
- HaloPSA Integration with MSPbots. The Contract Profitability App is pre-installed for all HaloPSA users.
- Financial role
How the App Works
The Contract Profitability App provides a comprehensive view of your contract performance through multiple dashboards.
Contract Profitability Overview
The Contract Profitability Overview provides a high-level summary of profitability trends across contracts, highlighting margins, costs, and labor efficiency over time. You can use it to:
- Track overall profitability and margin trends month-over-month
- Monitor labor efficiency and contribution rates over time
- Identify margin improvements or declines by contract type or contract category
Key Widgets and Metrics:
- Contract Profitability Summary (By Type): Table summarizing the contract count, billed amount, profit, profit margin, labor hours, effective rate, and contribution rate by contract type or contract category
- Contract Profit Margin Trend
- Contract Effective Rate Trend
- Contract Contribution Rate Trend
- Contract Labor Hours Trend
Contract Profitability Heatmap
The Contract Profitability Heatmap visualizes client profitability using a color-coded heatmap for quick assessment. You can use it to:
- Quickly spot clients with multiple low-margin contracts
- Use color cues to prioritize client reviews or cost optimizations
Key Widgets and Metrics:
- Contract Margin Review: Heatmap table showing the monthly profit margin per client
Contract Profitability Details
The Contract Profitability Overview offers detailed profitability breakdowns by contract, client, contract category, and contract type. You can use it to:
- Drill into contracts affecting overall margins
- Identify costly contracts or those with high labor/product costs
- Compare labor hours against targets to spot inefficiencies
- Inform pricing, renegotiation, or operational decisions
Key Widgets and Metrics
- Contract Profitability Details (by Client and Type): Detailed table showing billed amount, item cost, labor cost, profit margin, effective rate, and contribution rate by client and contract type
- Contract Invoice Items Drilldown
- Contract Actions Drilldown
- Contract Labor Hours vs. Target Hours: Line graph comparing actual labor hours versus target hours
- Contract Profit Margin Trend
Calculations and Data Sources
This table shows how key metrics in the app are calculated.
| Term | Calculation | Data Source |
| Value | Sum of (Quantity x Price) for all items in recurring invoices tied to the contract. | Recurring invoices: Quantity, Price |
| Billed Amount | Sum of (Quantity x Price) for all items in invoices tied to the recurring invoice of the contract. | Invoices: Quantity, Price |
| Item Costs | Sum of (Quantity x Cost) for all items in invoices tied to the recurring invoice of the contract. | Invoices: Quantity, Cost |
| Labor Hours | Sum of hours worked from all actions logged against the contract | Actions: Time Taken |
| Labor Costs | Sum of (Time Taken x Agent Hourly Cost) from all actions logged against the contract | Actions: Time Taken Agent: Hourly cost |
| Profit | Billed - (Item Costs + Labor Costs) | Same sources as Billed, Item Costs, and Labor Costs |
| Margin | Profit ÷ Billed | Same sources as Profit and Billed |
| Effective Rate |
Note: If the number of labor hours is < 1, then it is rounded off to 1. |
Same sources as Billed, Item Costs, and Labor Hours |
| Contribution Rate |
(Billed – Item Costs – Labor Costs) ÷ Labor Hours
Note: If the number of labor hours is < 1, then it is rounded off to 1. |
Same sources as Billed, Item Costs, Labor Costs, and Labor Hours |
| Target Hours |
1. Target Total Costs = Cost Margin × Billed
2. Target Labor Costs = Target Total Costs − Item Costs
3. Target Hours = Target Labor Costs ÷ Avg. Agent Hourly Cost |
Same sources as Billed, Item Costs, Labor Costs, and Labor Hours
Settings Page: Target Cost Margin (Default value at 25%) |
The image below shows the color code used to display the profit margin values across all dashboards.
Setup Instructions
After completing the prerequisites, go to the Apps section and open the Contract Profitability App for HaloPSA to get started.
The dashboards work out of the box, but you can customize how key metrics are calculated using the available options in the Halo Contract Profitability Settings.
Target Cost Margin - Set your desired cost margin (in decimals). The Target Cost Margin represents the percentage of labor costs and item costs relative to the total amount billed. It is used to calculate the target hours needed to achieve the desired profit margin. By default, the Target Cost Margin is set to 25%, which is 75% profit margin.
Include Invoiced Item Costs - This setting is enabled by default. Turn it off if you want total cost calculations to include only Labor Costs and exclude Item Costs.
Frequently Asked Questions (FAQs)
Does the Contract Profitability App use data from my accounting software (Quickbooks, Xero)?
No. The app only pulls data from HaloPSA and does not require any accounting software integration.
Can I clone the dashboards and datasets to customize them?
Yes, but we do not recommend cloning dashboards and datasets for customization. The datasets powering the Contract Profitability App are purpose-built with a complex logic. Customizing them without a deep understanding of the structure may lead to inaccurate results.
Instead, you can use the Contract Profitability App Settings which provides customization options for key calculations that help you align your contracts management better.
What is the reference date used?
Data is grouped by month, using the Invoice Date for invoices and the Date Done for actions.
Which invoices are included in the calculations?
Only recurring invoices tied to a contract are included.
What should I do when I see inaccurate numbers?
Start by reviewing the Calculations and Data Sources section of this article to understand how the metrics are generated. Then drill into the data by filtering by a specific client and invoice month validates the numbers at a more granular level.
Still unsure? Submit a support ticket with sample data, and our team will perform an in-depth investigation.