QuickBooks Desktop Enterprise: Running the Invoice Profitability by Customer Report
Learn how to run and customize the Invoice Profitability by Customer report in QuickBooks Desktop Enterprise to track margins, revenue, and costs.
QuickBooks Desktop Enterprise includes a specialized report that allows users to measure exactly how much they are making—or losing—on individual invoices. The Invoice Profitability by Customer report breaks down revenue, direct costs, and gross profit for every line item, giving business owners a clearer picture of their actual margins.
Accessing the Report
To generate this report, navigate to the Reports menu, select Customers & Receivables, and choose Invoice Profitability by Customers. Once the report generates, you can select Customize Report to adjust the data to your specific needs.
Users can change how the data is grouped by using the “Group By” dropdown. This allows you to view profitability by Customer:Job, Sales Rep, Class, or Item Type. Additionally, you can apply filters to narrow the results by specific date ranges, sales representatives, or customer jobs. For a deeper dive, switching to the Detailed Line-Item view highlights exactly which products or services are driving your margins.
Understanding the Columns
The report presents several key data points. The Act. Revenue column displays the income generated. The Act. Cost column shows the Cost of Goods Sold. The ($) Diff column reflects the gross profit in dollars.
Enterprise calculates profitability using two distinct metrics: Markup and Margin. The % Act. Markup column shows how much you increased your cost to arrive at the sales price. The % Act. Margin column shows what percentage of your total revenue is actual profit.
For example, consider an item that costs fifty dollars and sells for seventy-five dollars. The gross profit is twenty-five dollars. To calculate the markup percentage, you divide the twenty-five-dollar profit by the fifty-dollar cost, resulting in a fifty percent markup. To calculate the profit margin, you divide the twenty-five-dollar profit by the seventy-five-dollar revenue, resulting in a roughly thirty-three percent margin.
Alternative Methods for Running the Report
You can also run this report directly from a specific invoice. Go to the Customers menu and open the Customer Center. Under the Customers & Jobs tab, locate the desired customer either by selecting them from the Active Customers dropdown or by typing their name into the search field. Select the specific invoice row—ensuring the TYPE column reads “Invoice” and displays the correct invoice number—and then go to Reports followed by Invoice Profitability by Customer.
Setting Up Service Item Costs
A common hurdle users face when analyzing profitability is ensuring their service items have an associated cost. Without entering a cost, the profitability report cannot calculate an accurate margin.
To fix this, go to Lists and select Item List. Choose the service item you want to track. In the item setup window, check the box indicating that the service is used in assemblies or is performed by a subcontractor or partner. Checking this box reveals the necessary cost fields.
Enter the amount you pay for the service—such as a subcontractor’s hourly rate or internal labor cost—into the Direct Cost field. Next, assign an Expense/COGS account to track these costs properly on your books. Save the changes to complete the setup. Once these costs are assigned, the report will accurately reflect your true profitability.
For users needing to reconcile historical data or repairing damaged QuickBooks company files where cost data may have been lost or corrupted, ensuring these item profiles are complete is the first critical step. If you are transitioning between versions and need to convert QuickBooks company files, verifying that these cost fields carry over correctly is equally important.