Revenue per head rose 9%. Gross margin fell four points.

A service business can hire exactly the person it was missing and still end up with worse economics. The mechanism sits in grade mix, not effort.

By Steve 5 min read
Abstract bridge artwork for Revenue per head rose 9%. Gross margin fell four points.

The hire is rarely a mistake anyone regrets making. Lead times were stretching, the owner was reviewing work at eleven at night, and the obvious answer was someone experienced enough to be left alone. So a senior person joined, the queue shortened for a quarter, revenue per head went up, and gross margin quietly went down and stayed down. This is one of the most common ways a service business grows into worse economics. It is not a failure of discipline or effort. It is a failure of grade mix,…

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Important: General information only. Rialto Bridge articles describe patterns and considerations that may apply to a business; they are not financial, legal, tax or accounting advice, and they take no account of your particular circumstances. Consider your own situation and seek advice from a qualified professional before acting.

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