Revenue Mix

A P&L that reports one blended gross margin is hiding the quality of its earnings. The buyer's commercial team splits the revenue into component streams and runs EBITDA contribution by type. A business with 64% of revenue from recurring maintenance contracts at 52% gross margin and 36% from competitively bid project work at 23% looks healthy at a blended 38%. Separated, it's two businesses of very different quality. The maintenance book behaves like a subscription: predictable, high-margin, contractually protected. The project book is lumpy, low-margin, and dependent on competitive bidding. The buyer applies different multiple logic to each stream. Recurring revenue gets underwritten at full value. Project revenue gets a haircut: lower growth assumption, higher attrition, compressed margin in the forward model. Founders who present the blended number let the buyer write the story. Founders who separate the streams by type, with three years of margin-by-job data on the project side and renewal-rate data on the service side, control the narrative and reduce the finding.