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Sounds like a good topic for someone's MBA course.

Currently, we are assessing engagements where a small contract could lead to
a contract that is large enough to be attractive. Sometimes, we talk to
companies that are not looking for us, and we have to bow out. In other
cases, we seriously consider some relatively small engagements for customers
that could lead to more business near term.

A subject seeing a lot of press here has been the "merger" of BankBoston
with Fleet. BankBoston already knew that 80% of their customers were not
profitable in a given year. Fleet has begun charging fees that are not
consistent with the rest of the industry, and is losing small,
non-commercial customers. For a bank, my question is, after n years of me
not being a profitable customer, who am I going to go to when I need a car
loan or a mortgage? I usually start with my bank; I give them first shot at
my business. If they lose my business by charging me $100 in fees every
year, they will probably never make any money on me.

I am also a Home Depot customer, and wonder if they are losing money on me,
when I go through their register with some small purchase. I actually doubt
if they want most of the business I give them.

I would think that any business has to decide these issues. Of course, they
really cannot if they have no way to put a price on their own costs of doing
business. And if they "cost" this out incorrectly, they may discover that in
trying to save a few dollars, it has cost them in the intangibles in a way
that does show up on the bottom line.

Greg Stigers
http://www.cgiusa.com