Explore Margin Pressure Before Recommending a Service Redesign

Margin pressure often receives a pricing label before leaders inspect delivery choices, client mix, or unmeasured rework. A business development director should slow the first conversation down enough to learn where the client sees pressure and what data supports the view. A promise to improve margin gives a buyer little basis for choosing work. A clear discovery path gives leaders a reason to involve the right people.

Start with service lines carrying the greatest significance. Ask which work changed during the last two reporting periods. Ask whether utilization, realization, write offs, and planned versus actual effort are available at engagement level. Ask what leaders already tried. A new rate card, tighter approval rules, or staffing changes might have altered results. Those actions matter because a proposal should build from the present situation rather than repeat work already underway.

Find the executive who owns commercial policy and the leader who owns delivery operations. Their answers often point to different causes. Commercial leaders might focus on pricing exceptions. Practice leaders might focus on late scope changes. Finance might focus on reporting quality. The difference is valuable evidence. Do not force agreement in an early call. Your job is to locate where a shared review will help leaders make a decision.

In a fictional meeting, CFO Elena says, “Our advisory practice is busy, yet margins keep shrinking.” Director Ravi asks, “Which engagements show the largest gap between planned and actual effort?” Elena says complex projects add senior review hours which never appear in the estimate. Ravi asks whether those hours appear in time records. Elena says some do, while others appear as general management time. Ravi records the distinction. One problem concerns estimates. Another concerns how teams record effort.

Ravi asks, “Which leader approves a scope change after work begins?” Elena names the practice head. “Who sets the original staffing model?” She names a portfolio director. “Who decides whether senior review time belongs in a client estimate?” She names the commercial director. Ravi explains why one person cannot solve every issue. “A review needs each decision owner, along with the evidence behind each decision.” Elena agrees to invite all three leaders and a finance analyst.

Before proposing a review, define margin in the client’s own terms. Some firms use gross margin. Others use contribution after shared costs. Some teams look only at realized fees against direct labor. Ask finance for the calculation used in the relevant report. Ask whether partner time, subcontractor cost, and sales pursuit time appear inside or outside the number. A director who skips this question risks offering help for a measure nobody uses.

Request a small sample rather than every engagement. Three completed projects often show more than a broad average. Select one engagement with strong margin, one near target, and one with weak margin. Ask for the original scope, estimate, staffing plan, time record, change requests, invoice history, and post project notes where available. The sample should be fictional during practice, yet a live review should use client records approved by the relevant owner.

In a fictional sample, the strong project had a clear kickoff, a named client sponsor, and two approved scope changes. The near target project used extra senior review hours after a client request arrived by email with no change record. The weak project began with a low estimate, then added work during weekly calls without a commercial decision. Ravi does not announce a cause from three examples. He asks leaders to explain the pattern and identify which observations deserve further testing.

Use a simple engagement review sequence. First, compare the original estimate with the final effort. Next, identify work added after kickoff. Then identify who approved each addition. Review staffing changes and the reason behind them. Compare the billed amount with the terms agreed at the start. Last, ask whether a client outcome, relationship concern, or internal choice led the team to absorb work. Each step turns a broad margin complaint into decisions people recognize.

Make the conversation specific. A practice head might say, “Our teams need more flexibility.” Ask, “Which decision needs flexibility, and who should approve an exception?” A commercial director might say, “Rates are too low.” Ask, “Which proposals fell below the current target, and who approved those terms?” A finance analyst might say, “Time data is unreliable.” Ask, “Which teams record time differently, and what record would settle the question?” Direct questions reveal where leaders need evidence.

Avoid treating every weak result as a pricing issue. A client with a low initial fee and controlled delivery creates one decision. A client with a reasonable fee and repeated unpaid changes creates another. A project with full payment yet heavy senior rework creates a third. The response might involve proposal review, scope approval, staffing practices, or time recording. Do not choose a redesign until decision owners agree on the problem.

In a fictional follow up, Elena asks, “Will you redesign our pricing model right away?” Ravi replies, “The three engagements show questions about scoping, staffing, and recorded effort. A pricing redesign needs a shared fact base and approval from commercial and practice owners. The next review should establish which decision each leader needs to make.” Elena asks for a quick result before a leadership meeting. Ravi offers a decision map, not a promised margin figure. He says the map will show evidence, owners, and required choices for the sample findings.

A useful decision map names the issue in plain words. One row might state senior review added after kickoff. Choices include estimating senior review upfront or requiring approval before extra review. Evidence includes estimates, time records, and client change notes. Practice head and commercial director own separate approvals. Another row might state unpaid client requests received during delivery. Choices include a written change record or a defined relationship exception. Account leader owns the client discussion and commercial director owns terms. Clear rows prevent a vague action plan.

Close the meeting by documenting the sample engagements, available reports, and people who will interpret them. Name any data limit. If time records do not separate senior review from general management, say so. A known limit is safer than a made up number. Ask finance and practice leaders to confirm the record. Their feedback shows whether the group shares the same starting facts.

Set a next meeting around a decision, not a presentation. For example, the group might meet to decide who approves scope changes above a stated effort threshold. Another meeting might settle which senior review hours belong in original estimates. Put the required evidence and owners in the invitation. People arrive prepared when the meeting has a purpose they recognize.

Practice this conversation with a fictional advisory firm. Ask a colleague to play a CFO who insists price cuts caused every problem. Give the colleague three hidden facts: one project lost margin through unpaid extra work, one through a poor staffing decision, and one through an approved discount. Your task is to uncover each fact without offering a solution early. Finish by naming the sample records, the decision owners, and the next decision. Listen for unsupported claims. Replace each claim with a question tied to evidence or authority.