In B2B companies—where long sales cycles, complex projects, and overhead expenses can cloud financial visibility—it’s important to track the right profitability metrics. While top-line revenue can look promising, what really matters is how efficiently you’re operating and whether your pricing structure supports the long-term growth you want.
Here are the top profitability metrics every B2B business should monitor to better understand and adapt margins, processes, and scale.
The Operating Expense Ratio shows how much of your revenue is being consumed by general business overhead, such as rent, salaries, admin costs, and software.
This metric reveals whether your overhead is creeping too high relative to your income. A rising ratio may mean it's time to cut costs or raise prices.
Operating Expenses = $250,000
Revenue = $1,000,000
Interpretation: 25% of revenue is going toward operating expenses. If this ratio rises over time without a corresponding increase in revenue, it’s a red flag for profitability.
Project Profitability measures how much profit you’re making on each individual client engagement or contract.
This helps you identify which projects are delivering strong returns—and which ones are draining your time and resources. It's crucial for service-based businesses with multiple active contracts.
Project Revenue = $50,000
Project Costs = $35,000
Interpretation: This project generated a 30% profit margin, which might work as a benchmark for future contracts.
ARPC measures the average value of each client relationship over a given period.
It reveals which industries, client types, or segments are the most profitable—and helps you prioritize efforts when feeling stretched. It also complements Project Profitability by zooming out to assess account-level health.
Revenue = $500,000
Active Clients = 25
Gross Profit Margin shows how efficiently your B2B business delivers its products or services, before accounting for overhead or admin costs.
It helps you understand if your cost of production, delivery, or labor is leaving enough margin to cover other expenses and turn a profit.
Revenue = $100,000
COGS = $60,000
Interpretation: You retain 40% of each dollar earned after covering direct costs, which can then be used for operating expenses and profit.
Net Profit Margin reflects your business’s overall profitability after all expenses—including overhead, taxes, and interest—are deducted from revenue.
It tells you if your pricing, cost structure, and expense management are aligned to produce a sustainable profit.
Revenue = $100,000
Net Income = $12,000
Interpretation: After all costs, your business keeps 12 cents of every dollar earned. This is a relatively healthy metric, depending on your industry.
Tracking profitability isn’t just about making sure you’re not in the red—it’s about understanding which clients, projects, and decisions drive the most value for your B2B business. Whether you're managing complex contracts or long-term client relationships, these metrics can reveal opportunities to increase pricing, improve efficiency, or eliminate underperforming work.
LedgerFi helps B2B businesses track these metrics with customized reports, expert bookkeeping, and strategic insights. Ready to optimize your profitability? Let’s talk.