Services business glossary

Short, plain definitions of the terms a founder of a consultancy, agency or managed service provider meets: each one first, then how it plays out in a services firm.

• Positioning for a services firm: definition, and how to do it by stating what you are not

  Positioning is the decision about which clients, problems and competitors a firm wants to be compared with, stated so plainly that a buyer can place it in a sentence. For a services firm, the quickest route is negation: say what you are not, then publish it.

• Productised service: definition, examples and pricing

  A productised service is expert work packaged with a fixed scope, a fixed price and a repeatable delivery process, so that a client can buy it without a proposal, a discovery call or a negotiation over hours.

• Recurring revenue: definition, the four ways a services firm can count it, and the one diligence counts

  Recurring revenue is income a business expects to receive again next period without selling it again. In a services firm it comes from retainers, managed services and support contracts, and its size depends on which of four definitions you count it by.

• Revenue per billable person (and revenue per employee): definition, formula and how to set a target

  Revenue per billable person is revenue in a period divided by the number of people in a unit whose time is sold. It is revenue per employee with the denominator narrowed to the people who earn it, at company, team or deal level.

• Utilisation rate for a consultancy or agency: formula, what counts as good, and where it misleads

  Utilisation rate is the share of a person's available working time that is billed to clients, usually billable hours divided by available hours in a period. It measures how busy a services firm's people are, not how much money that busyness makes.

• What is a consultancy? Consultancy vs agency vs MSP vs contractor, explained for founders

  A consultancy is a business that sells the judgement and skilled time of its people to solve a client's problem, priced by the day or by the engagement. Agencies, MSPs and contractors differ in what they sell and how they are valued.

• What is a rate card? Rate cards for consultancies and agencies explained

  A rate card is the published list of what a consultancy, agency or managed service provider charges for its people's time: one price per grade per unit, usually a day, with the commercial terms that travel with the price attached.

• What is a services business, and why its maths is different from a product company

  A services business (service business, professional services firm) earns its revenue by selling the time and expertise of people rather than copies of a product. Revenue is bounded by headcount, rate and utilisation, which is why product-company advice misleads its founders.