Here’s the idea:

We’re already paying the lawyer this much, and she has some free time. We should take on this project at a steep discount because, even though it’s not a particularly profitable piece of business, it’ll work out because she’s using her free time.

Let’s do it. Why not? We’re already paying her to sit around. Why not let her do this work so we can generate some extra revenue with that free time?

After all, any revenue is better than none, right?

Now, with our magical thinking, this unprofitable project is nothing but profit. It’s suddenly 100% profit. See what I mean? It’s magic!

But we’re wrong. Our thinking is flawed.

The Hidden Costs You Didn’t Consider

Once you start taking on extra projects at a discount to fill the downtime, the dominoes start to fall. Unprofitable projects breed other unprofitable projects. Then we end up with more unprofitable work than we can handle, and our clients start referring even more unprofitable business.

It gets worse. The problem gets bigger when the unprofitable work takes even more resources than we anticipated. She had free time, but her supervisor didn’t, and now that person gets involved when the situation sours. And then the administrative people get engaged. And the losses get bigger and bigger.

That “extra” project becomes an even bigger loser when she explains that she doesn’t have time to squeeze in your new project (one that’s priced profitably) because she’s tied up with the thing she’s doing in her free time. How did this little bit of extra work consume your entire practice? How did you become the place that’s underpricing the work? It all started with that little bit of “extra.” It made sense at the time. She was just sitting around with free time.

Keep Focusing on Profit

Your mission is to keep your team busy with profitable work. Projects that aren’t priced to earn a profit are money losers. No amount of rationalizing turns unprofitable work into profitable work. That simply doesn’t happen.

Price yourself right. Build in a profit. It’s the way you grow. Profit funds the team, their development, new technology, better systems, and marketing that enables you to attract business, allowing you to enhance your reputation. Taking on unprofitable projects jeopardizes your business. Profit is an essential piece of keeping a great practice great.