The Big Customer

One client pays the bills, and sets the terms.

01
Situation
A single customer grows to more than half of revenue. It demands discounts, longer payment terms and custom work.
02
Evidence
- High revenue concentration
- Margin on the account falling
- Payment terms extended repeatedly
- Other clients deprioritised
03
The decision
Accept the terms to keep the account, or reduce dependence?
04
Analysis
Concentration shifted negotiating power. The business priced the account as strategic without measuring what it costs.
05
Framework
Customer profitability and concentration risk.
06
Resolution
True account profitability is calculated, terms are renegotiated, and a target is set to reduce concentration.
07
Founder exercise
Apply it to your own business:
- Calculate your top three customers' share of revenue
- Estimate each one's profitability
- Decide the maximum share you would accept

Situation