Economics
Compare the whole relationship.
What you keep matters. So do the work you receive, the obligations you retain, and the terms that change as your business changes.
Common annual cash basis
Defined revenue
− firm share − shared expenses
− direct expenses − provider costs
= Net retained practice economics
Effective retained percentage = net retained practice economics ÷ defined gross practice revenue. At zero revenue, the percentage is undefined. These measures are not GAAP profit, personal take-home pay, or after-tax income.
Set the basis before comparing the numbers.
| Category | How to keep the comparison honest |
|---|---|
| Defined gross practice revenue | Use the same economic unit, revenue boundary, annual period, and cash basis in both scenarios. Identify deductions already taken before this revenue measure. |
| Firm revenue share | Amounts the practice pays or gives up to the firm. Keep them separate from shared expenses. |
| Allocated shared expenses | State the actual resource pool, allocation basis, billing interval, reconciliation process, and exclusions. Do not assume equal or no-markup sharing. |
| Direct practice expenses | Practice-paid staffing, technology, occupancy, and other direct costs. State how owner salary is treated; owner distributions are not an expense. |
| Provider / optional-service costs | Separately paid service costs borne by the practice that are not in another category. |
| Client-cost view | Client-paid investment/product costs remain outside the practice comparison unless the practice actually bears them. |
| Transition view | Separate one-time outlays, overlapping costs, assistance, and repayment/vesting conditions from recurring economics. |
Two legitimate configurations.
An existing firm buying selected services and a professional considering affiliation have different costs and responsibilities. Identify the actual providers and scope in each proposed configuration.
Keep the line items auditable.
For every cost, record the provider, amount or basis, billing interval, allocation method, exclusions, effective date, and what changes with revenue or service levels. A cost deducted before the revenue boundary must not be deducted again.
A substantive next step
Start with the work
you want to do differently.
Tell us what is working, where capacity is stretched, and what you want your next chapter to look like. Explore scope, fit, and economics with the appropriate company.
Start a fit conversation