Driving Value For Your IT Services Firm: Five Core Insights Every IT Services Leader Should Know

The Most Valuable Financial Metrics for IT Services Firms

When it comes to running a healthy, growing IT services business, not all dollars are created equal. A mid-year review is a perfect time to understand which metrics matter most and how to adjust course while there is still time to hit year-end goals. ConnectWise’s 2025 financial review identifies five areas every CFO should watch:

1.     Revenue growth and mix. Revenue is the foundation of profitability, but not all revenue is good revenue. Low-value sources include clients outside your ideal technology stack or unprofitable one-off projects. Focus on retaining satisfied clients, cross-selling your full suite of core offerings, implementing value-based price adjustments, and pursuing high-growth customers.

2.     Product gross margin. Product margin (typically measured as product revenue times margin percentage) should exceed 27% for best-in-class performance. Improve this by charging for value, holding regular QBRs to set expectations, consolidating vendors, and bundling services rather than quoting individual line items.

3.     Services gross margin. Top IT Services Firms achieve service margins around 48%. Raise margins by eliminating discounting, standardizing your technology stack, focusing on a single customer profile, and documenting processes to drive efficiency.

4.     SG&A leverage. Selling, general, and administrative costs erode gross margin. Best-in-class providers spend about$0.58 of every dollar of gross margin on SG&A, leaving $0.42 for profit and reinvestment. Grow gross margin faster than overhead, align marketing spend with ROI, and consider a zero-based budgeting review to reset spending.

5.     Current ratio. Ensure current assets comfortably cover current liabilities; strong liquidity allows you to invest in growth without jeopardizing operations.

These metrics go beyond simple revenue and provide a comprehensive picture of financial health. A fractional CFO can help set targets, monitor progress, and ensure pricing, operations, and investments align with strategic financial goals.

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