The Agreement Profitability App offers in-depth insights into the financial performance of managed service agreements (contracts in Autotask). It enables Managed Service Providers (MSPs) to track profitability trends, analyze cost breakdowns, and identify underperforming contracts. This app helps decision-makers and finance managers maximize revenue, reduce inefficiencies, and validate the ROIs of contracts.
By combining billing, labor, and product addition data, the app offers a comprehensive view of profit margins, effective rates, and contribution rates over time and across clients.
Key Features and Benefits
- Track Contract Profitability Trends: Visualize monthly trends in Profit Margin, Effective Rate, and Contribution Rate to understand overall performance.
- Client-level Analysis: Use heatmaps to quickly spot underperforming accounts, filtering by company, contract type, or contract category.
- Detailed Profitability Views: Drill into profitability by client or contract for in-depth insights.
- Break Down Costs and Revenue: Compare labor efficiency and product billing activity to assess contract value.
Prerequisites
Before using the Agreement Profitability App, ensure you have the following:
- Autotask Integration with MSPbots. The Agreement Profitability App is pre-installed for all Autotask users.
- Financial role
How the App Works
The Agreement Profitability App provides a comprehensive view of your contract performance through multiple dashboards.
Contract Profitability Overview
The Contract Profitability Overview provides a high-level summary of profitability trends across contracts, highlighting margins, costs, and labor efficiency over time. You can use it to:
- Track overall profitability and margin trends month-over-month
- Monitor labor efficiency and contribution rates over time
- Identify margin improvements or declines by contract type or contract category
Key Widgets and Metrics:
- Contract Type Summary: Table summarizing the contract count, billed amount, profit, profit margin, labor hours, effective rate, and contribution rate by contract type or contract category
- Contract Profit Margin Trend
- Contract Effective Rate Trend
- Contract Contribution Rate Trend
- Contract Labor Hours Trend
Contract Profitability Heatmap
The Contract Profitability Heatmap visualizes client profitability using a color-coded heatmap for quick assessment. You can use it to:
- Quickly spot clients with multiple low-margin contracts
- Use color cues to prioritize client reviews or cost optimizations
Key Widgets and Metrics:
- Contract Margin Review: Heatmap table showing the monthly profit margin per client
Contract Profitability Overview
The Contract Profitability Overview offers detailed profitability breakdowns by contract, client, contract category, and contract type. You can use it to:
- Drill into contracts affecting overall margins
- Identify costly contracts or those with high labor/product costs
- Compare labor hours against targets to spot inefficiencies
- Inform pricing, renegotiation, or operational decisions
Key Widgets and Metrics
- Contract Profitability Details (by Client and Type): Detailed table showing billed amount, addition cost, labor cost, profit margin, effective rate, and contribution rate by client and contract type
- Contract Hours vs. Contract Target Hours: Line graph comparing actual labor hours versus target hours
- Contract Profit Margin Trend
Contract Effective Rate Overview
The Contract Effective Rate Overview helps you pinpoint which clients or contract types are yielding strong returns per hour—and which are dragging down your margins. The Top 50 and Bottom 50 views let you quickly zero in on high- and low-performing contracts for deeper review or corrective action.
- Compare effective rates across clients to identify which contracts are delivering strong value per hour.
- Use the contract type breakdown to spot patterns in performance across different service offerings.
- Review the Top 50 contracts to replicate best practices across similar clients or contract types.
Key Widgets & Metrics
- Contract Effective Rates | Per Contract Type
- Top 50 Contracts Effective Rates | Per Customer
- Bottom 50 Contracts Effective Rates | Per Customer
Calculations and Data Sources
This table shows how key metrics in the app are calculated.
| Term | Calculation | Data Source |
| Value | Sum of (Quantity x Unit Price or Rate) for contract services |
Billing Item: Quantity Services: Unit Price Contract Rate: Rate |
| Billed Amount | Sum of (Quantity x Unit Price) for each billing item |
Billing Item:
|
| Service Costs | Sum of costs for billing items, excluding Labor and Expense billing item types |
Billing Item: Cost |
| Labor Hours | Sum of hours worked of all time entries logged against a contract |
Time Entries: Hours Worked |
| Labor Costs | Sum of (Hours Worked x Internal Cost) of all time entries logged against a contract |
Members: Internal Cost Time Entries: Hours Worked |
| Profit | Billed - (Service Costs + Labor Costs) | Same sources as Billed, Service Costs, and Labor Costs |
| Margin | Profit ÷ Billed | Same sources as Profit and Billed |
| Effective Rate |
Note: If the number of labor hours is < 1, then it is rounded off to 1. |
Same sources as Billed, Service Costs, and Labor Hours |
| Contribution Rate |
(Billed – Service Costs – Labor Costs) ÷ Labor Hours
Note: If the number of labor hours is < 1, then it is rounded off to 1. |
Same sources as Billed, Service Costs, Labor Costs, and Labor Hours |
| Target Hours |
1. Target Total Costs = Cost Margin × Billed
2. Target Labor Costs = Target Total Costs − Service Costs
3. Target Hours = Target Labor Costs ÷ Avg. Internal Cost |
Same sources as Billed, Service Costs, Labor Costs, and Labor Hours
Settings Page: - Target Cost Margin (Default value at 70%) |
The image below shows the color code used to display the profit margin values across all dashboards.
Setup Instructions
After completing the prerequisites, go to the Apps section and open the Agreement Profitability App for Autotask to get started.
The dashboards work out of the box, but you can customize how key metrics are calculated using the available options in the Autotask Settings for App Packages.
Target Hours - Set your desired cost margin (in decimals). The Target Cost Margin represents the percentage of labor costs and additional costs relative to the total amount billed. It is used to calculate the target hours needed to achieve the desired profit margin. By default, the Target Cost Margin is set to 70%.
Frequently Asked Questions (FAQs)
Does the Agreement Profitability App use data from my accounting software (Quickbooks, Xero)?
No, the app only pulls data from Autotask and does not require integration with any accounting software.
Can I clone the dashboards and datasets to customize them?
Yes, but we do not recommend cloning dashboards and datasets for customization. The datasets powering the Agreement Profitability App are purpose-built with a complex logic. Customizing them without a deep understanding of the structure may lead to inaccurate results.
Instead, you can use the Settings page, which provides customization options for key calculations that help you align your contracts management better.
What is the reference data for Invoices?
The Agreement Profitability App uses the posted date of invoices.
Which invoices are included in the calculations?
All contractss with invoices in the selected period.
What should I do when I see inaccurate numbers?
Start by reviewing the Calculations and Data Sources section of this article to understand how the metrics are generated. Then:
- Check the app settings - Adjusting certain options can help align the calculations with your contract setup.
- Drill into the data - Filtering by a specific client and invoice month validates the numbers at a more granular level.
Still unsure? Submit a support ticket with sample data, and our team will perform an in-depth investigation.