“Manage Customers for Profits, Not Just Sales.”
In most enterprise portfolios, the top 20-30% of customers generate 150-300% of realized profits, while the bottom 20-30% destroy 50-100% of those gains. The Profit Curve is the definitive framework for exposing this distribution.
The Profit Curve methodology emerged from Activity-Based Costing (ABC) research pioneered by Robert S. Kaplan and Robin Cooperat Harvard Business School. Their work proved that traditional P&L statements often mask individual customer profitability, leading to a “hidden” erosion of shareholder value.
The steepest part of the profit curve. These are your most efficient relationships, where revenue significantly outpaces the total cost of service.
The descending “tail.” These customers consume excessive resources, technical support, or custom engineering, resulting in a net loss for the business.
High-efficiency scale
Maximum realized yield
Resource-heavy drag
“An obscure analysis method which increased profits at WP Engine by millions of dollars.”
View Strategic SessionYour most profitable customers. Protect and grow these relationships.
Reliable profit generators with growth potential.
Acceptable margins but room for improvement.
Customers hovering around profitability threshold.
Actively losing money on these customers.
Largest profit destroyers in your portfolio.
How much more profit your best customers generate before tail customers erode it. Higher = bigger opportunity.
Percentage of profit destroyed by unprofitable customers. Industry median is ~15-20%.
Overall profitability rate. SaaS typically 60-80%, services 30-50%.
Your potential margin if you fixed or removed unprofitable customers.
Share of profit from top 50% of customers (segments A+B). Exceeds 100% because tail customers have negative profit.
1. Cohen, J. (2025). “Profit Curve.” YouTube. Analysis of WP Engine customer profitability data.
2. Kaplan, R.S. & Cooper, R. (1998). Cost & Effect: Using Integrated Cost Systems to Drive Profitability and Performance. Harvard Business School Press.
3. Kaplan, R.S. & Narayanan, V.G. (2001). “Measuring and Managing Customer Profitability.” Journal of Cost Management.
4. Shapiro, B.P., Rangan, V.K., Moriarty, R.T., & Ross, E.B. (1987). “Manage Customers for Profits (Not Just Sales).” Harvard Business Review, 65(5), 101-108.
5. Stubing, M. (2019). “Customer Profitability Using ABC.” Doctoral Dissertation, DePaul University.
For a comprehensive synthesis of 30 years of customer profitability research:
View Full Research SummaryYou understand the methodology. Upload a CSV and see your own profit curve — which customers to protect, reprice, or release.
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Margin Levers implements publicly available analytical frameworks based on research by Kaplan, Cooper, and Shapiro. The profit curve methodology is a recognized industry standard for customer profitability assessment. Jason Cohen is cited as a practitioner and thought leader; no official endorsement is implied.