How to Use QuickBooks Profitability Tracker to Identify Your Highest-Return Services
In today’s competitive service landscape, knowing which of your offerings deliver the best return is the key to smarter resource allocation and sustainable growth. QuickBooks Online Profitability Tracker, anchored by the Profit and Loss by Class (or Product/Service) report and the built-in Profitability dashboard gives you the data-driven insights you need to focus on your most profitable services and maximize both top-line revenue and bottom-line profit.
Why Profitability Tracking Matters
Many service businesses measure success by revenue alone. But revenue doesn’t account for costs or the time you invest. A $5,000 engagement that eats up 100 hours may generate less true return than a $2,000 engagement completed in 10 hours. Tracking profitability by service line enables you to:
Compare gross margin percentage across services
Calculate profit per hour/Job/Lead to factor in your time/resource investment
Optimize pricing, marketing, and processes around your highest-return offerings
By leveraging QuickBooks’ Profitability Tracker, you turn your bookkeeping system into a strategic growth engine rather than a simple compliance tool.
Step 1: Tag Every Service as a Class or Product/Service
Set up Classes (or Locations): In QuickBooks Online, navigate to Settings > All Lists > Classes. Create one class for each service offering (e.g., "Basic Bookkeeping," "Monthly Close," "CFO Advisory").
Assign transactions: Whenever you create an invoice or record an expense, assign the appropriate class (or product/service) to each line item.
Tip: For historical data, use the Accountant Tools’ Reclassify Transactions feature to tag past entries in bulk.
Step 2: Run the "Profit and Loss by Class" Report
Go to Reports > Profit and Loss by Class.
Select your date range Last Quarter, Year‑to‑Date, or a Custom period.
Click Customize and enable Gross Profit and Net Income columns.
Add Gross Profit Percent and sort descending to instantly see which services yield the highest margins.
This report clearly displays revenue, cost of goods sold (COGS), gross profit, and net income by service line.
Step 3: Leverage the Profitability Dashboard
Navigate to the Profitability tab under Business overview in QuickBooks Online to access interactive widgets that showcase:
Top-performing services by profit
Margin trends over time
Service contributions to overall net income
Use these visuals to spot emerging winners or warning signs, then export the underlying data for deeper analysis in spreadsheets or Business Intelligence tools.
Step 4: Calculate True Profit per Hour
Profitability isn’t just about dollars; it’s also about time. To identify your true highest-return services:
Track hours per engagement using QuickBooks Timesheets or an integration like TSheets.
Divide the net profit (from your P&L by Class report) by the hours logged.
Rank services by Profit profit per hour.
Services with the highest profit per hour are your “A‑players”, the ones worth promoting, automating, or charging premium rates.
Step 5: Take Strategic Action
By aligning your marketing, pricing, and operational efforts with your profitability insights, you ensure every dollar and every hour delivers maximum impact.
Step 6: Build a Habit of Continuous Monitoring
Monthly Reviews: Schedule a recurring review of your P&L by Class report.
Set Alerts: Use QuickBooks or third‑party tools to notify you if a service’s margin falls below a set threshold.
Adjust and Iterate: As you gather more data, refine your class structure, pricing tiers, and service bundles.
Continuous monitoring transforms bookkeeping from a retrospective chore into a forward‑looking strategic practice.
Conclusion
QuickBooks Profitability Tracker gives you the clarity to identify and double down on your highest-return services. By combining P&L by Class reports, the Profitability dashboard, and profit-per-hour calculations, you can reallocate resources, optimize pricing, and streamline operations around the offerings that truly drive your bottom line.
Turn your bookkeeping data into your most powerful growth lever. Start tagging, tracking, and optimizing today and watch your business thrive tomorrow.
