Every owner has lived this: revenue grows 40% and the margin does not move. The reason shows up on the payroll. More orders means more people checking orders, more people answering customers, more people closing the month. The growth is real and the company is no better off.
Scale is not selling more. It is selling more without the cost climbing alongside it.
The money was never in the software
Sequoia Capital sums up the size of the problem with a ratio: for every dollar spent on software, six are spent on services. That is, on people doing the task. Which is why changing systems almost never moves the margin: you are touching one sixth of the bill, and the cheap side of it.
The useful question is not "which software do I buy". It is which of my costs grows every time I sell more — and what would have to happen for it to stop growing.
How to measure it in an afternoon
Put two years side by side. Revenue, and headcount by area. Wherever the two lines rise together, that cost is tied to volume.
Ask what that area does all day. Not the job title: the task. If the answer is reading, checking, typing and passing along, the work is volume, not judgement.
Simulate double the volume. How many more people? That number is your growth ceiling. That is the thing you are trying to change, not the price of a licence.
What this does not mean
It does not mean firing anyone. In practice, the area that was about volume becomes the area for exceptions: fewer people on the line, the same people handling the hard cases and the customer who complains. The team disappears from the productivity spreadsheet and shows up on the quality one. Anyone who has been through it knows the second one is what keeps customers.
Source: Sequoia Capital, "Services: The New Software" (Julien Bek, March 2026), for the one-to-six ratio.
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