What is engagement economics?

Engagement economics is the financial analysis of individual client engagements, examining revenue, costs, realization rates, and profitability at the project level. It reveals which clients and projects actually make money versus those that only appear profitable. Understanding engagement economics enables better pricing and client selection.

What projects really earn

You billed $25,000. Staff worked 120 hours. Loaded labor cost: $22,000. Actual profit: $3,000 or 12% margin. The invoice looked healthy. The economics were thin. Engagement economics forces honesty about which work generates real profit.

Loaded labor cost

Base salary is not a cost. Add payroll taxes at 7.65%, benefits at 15-25%, PTO, and training. A $70,000 salary becomes $95,000 loaded. Divide by 1,750 productive hours equals $54/hour. Bill at $150? Margin exists. Bill at $75? Lose money.