Professional Services Metrics
Metrics for measuring professional services delivery, profitability, and capacity.
Applicable when implementation, consulting, or training are revenue-generating services.
Revenue Metrics
Services Revenue
Definition: Revenue from professional services (implementation, consulting, training).
Formula:
Services Revenue = Sum of recognized services revenue in period
Services as % of Total Revenue
Definition: Professional services contribution to total revenue.
Formula:
Services % = Services revenue / Total revenue × 100
Benchmarks:
- Below 10%: Product-led, minimal services
- 10-20%: Services-assisted product
- 20-30%: Balanced model
- Above 30%: Services-heavy (may impact valuation multiples)
Note: High services % can be viewed negatively by investors (less scalable than product revenue).
Services Attach Rate
Definition: Percentage of product deals that include services.
Formula:
Attach Rate = Deals with services / Total deals × 100
What it tells you: How often services are sold with product.
Average Services Deal Size
Definition: Average value of services engagements.
Formula:
Avg Services Deal = Total services bookings / Number of services engagements
Services Backlog
Definition: Contracted services not yet delivered.
Formula:
Backlog = Services booked - Services delivered (revenue recognized)
What it tells you: Future services revenue and delivery workload.
Profitability Metrics
Services Gross Margin
Definition: Services revenue minus direct delivery costs.
Formula:
Services Gross Margin = (Services revenue - Direct delivery cost) / Services revenue × 100
Direct costs: Consultant salaries, travel, contractor costs.
Benchmarks:
- Below 20%: Unprofitable, review pricing
- 20-30%: Low margin
- 30-40%: Average
- 40-50%: Good
- Above 50%: Excellent
Project Margin
Definition: Gross margin on individual projects.
Formula:
Project Margin = (Project revenue - Project costs) / Project revenue × 100
What it tells you: Profitability by engagement. Identify losers.
Realization Rate
Definition: Actual revenue realized vs potential revenue at standard rates.
Formula:
Realization Rate = Actual revenue / (Hours worked × Standard rate) × 100
Benchmarks:
- Below 80%: Significant discounting or write-offs
- 80-90%: Average
- 90-100%: Good pricing discipline
- Above 100%: Premium pricing achieved
Write-off Rate
Definition: Percentage of billable hours written off (not billed to client).
Formula:
Write-off Rate = Written-off hours / Total billable hours × 100
Target: <10%
Utilization Metrics
Billable Utilization
Definition: Percentage of available time spent on billable work.
Formula:
Billable Utilization = Billable hours / Available hours × 100
Available hours: Total work hours minus PTO, holidays, company meetings.
Benchmarks:
- Below 60%: Underutilized
- 60-70%: Average
- 70-80%: Good
- Above 80%: Maxed out (burnout risk)
Target: 70-75% sustainable.
Total Utilization
Definition: Percentage of time spent on all productive work (billable + non-billable).
Formula:
Total Utilization = (Billable + Non-billable productive hours) / Available hours × 100
Non-billable productive: Training, pre-sales, internal projects.
Bench Rate
Definition: Percentage of team without billable assignment.
Formula:
Bench Rate = Consultants without assignment / Total consultants × 100
Target: <15%
What it tells you: Capacity available vs excess.
Capacity
Definition: Total billable hours available in period.
Formula:
Capacity = Consultants × Available hours per consultant
Capacity Utilization
Definition: Billable hours sold vs available.
Formula:
Capacity Utilization = Hours booked / Capacity × 100
Delivery Metrics
On-Time Delivery
Definition: Percentage of projects delivered by committed date.
Formula:
On-Time Delivery = Projects on time / Total projects completed × 100
Target: >85%
On-Budget Delivery
Definition: Percentage of projects delivered within budget.
Formula:
On-Budget = Projects within budget / Total projects × 100
Target: >80%
Scope Change Rate
Definition: Percentage of projects with scope changes.
Formula:
Scope Change Rate = Projects with scope changes / Total projects × 100
What it tells you: Scoping accuracy and change management.
Project Duration Accuracy
Definition: Actual duration vs estimated duration.
Formula:
Duration Accuracy = Estimated duration / Actual duration × 100
Target: 90-110%
Milestone Completion Rate
Definition: Percentage of milestones completed on schedule.
Formula:
Milestone Completion = Milestones on time / Total milestones × 100
Quality Metrics
Project CSAT
Definition: Customer satisfaction with services engagement.
Formula:
Project CSAT = Positive ratings / Total ratings × 100
Surveyed at project completion.
Target: >90%
Project NPS
Definition: Net Promoter Score for services experience.
Formula:
Project NPS = % Promoters - % Detractors
Escalation Rate
Definition: Percentage of projects with escalations.
Formula:
Escalation Rate = Projects with escalations / Total projects × 100
Target: <10%
Rework Rate
Definition: Percentage of deliverables requiring rework.
Formula:
Rework Rate = Deliverables reworked / Total deliverables × 100
Target: <5%
Reference-ability
Definition: Percentage of completed projects that become referenceable.
Formula:
Reference-ability = Referenceable projects / Completed projects × 100
Target: >70%
Productivity Metrics
Revenue per Consultant
Definition: Services revenue per delivery resource.
Formula:
Revenue per Consultant = Services revenue / Consultant headcount
Benchmarks: $150K-$300K annually, depending on rate structure.
Projects per Consultant
Definition: Average projects delivered per consultant per year.
Formula:
Projects per Consultant = Completed projects / Consultant headcount
Average Project Duration
Definition: Typical length of engagements.
Formula:
Avg Duration = Sum of project durations / Number of projects
Pipeline Metrics
Services Pipeline
Definition: Value of services opportunities in pipeline.
Formula:
Services Pipeline = Sum of services opportunity values
Services Win Rate
Definition: Percentage of services opportunities won.
Formula:
Services Win Rate = Services deals won / (Won + Lost) × 100
Time to Start
Definition: Time from services sold to project kickoff.
Formula:
Time to Start = Median of (Kickoff date - Close date)
What it tells you: Resource availability and scheduling efficiency.
Summary Table
| Metric | Type | Primary Indicator Of |
|---|---|---|
| Services Revenue | Revenue | Services contribution |
| Services Gross Margin | Profitability | Delivery economics |
| Realization Rate | Profitability | Pricing discipline |
| Billable Utilization | Utilization | Resource productivity |
| Bench Rate | Utilization | Capacity management |
| On-Time Delivery | Delivery | Project execution |
| Project CSAT | Quality | Customer satisfaction |
| Revenue per Consultant | Productivity | Team efficiency |