The Gross Margin That Could Not Survive a Hire

A founder-led professional services firm wanted to hire and raise the owner's pay. Cash reserve came first, then gross margin, because gross margin determines whether a hire ever pays for itself. Her profit and loss showed a gross margin of roughly 80 percent, but she delivered most of the client work herself and her own hours never entered the cost of delivery. Her team tracked hours on one live project, and the effective gross margin including her time came in at 52 and 47 percent by phase, falling to 25.7 percent once the planned hire was included. All of it sat below the 60 percent floor, and the test set the ceiling on what she could pay.