20. The Cost of Over-Service Boundaries That Build Margin

A series about business efficiency, finding profit and how to get there

Introduction
Great service is often what sets SMEs apart. It builds loyalty, earns referrals and creates a reputation for care.

But somewhere along the line, service excellence can quietly cross a line and become over-service.

You say yes when you should say “not included.” You work late to re-do something the client changed their mind on. You throw in extras to “keep them happy,” even when there’s no margin left and worst of all, your best clients get the same service level as your most demanding ones - because everyone gets the same.

This isn’t generosity. It’s leakage.

In a business that values efficiency and sustainability, boundaries aren’t barriers - they’re margin builders. They ensure that service remains high-quality, human and healthy, without turning your time and energy into an unpriced donation.

Actions to Be Taken
Here’s how to reduce over-service and rebuild healthy service boundaries that protect your people, your profit and your best customers.

Audit What You’re Giving Away
Make a list of things you routinely provide without charging or limiting, such as -

• Extra revisions

• After-hours support

• Project scope changes

• Customisation

• Rush jobs

Estimate the hours involved. Multiply by hourly wage or opportunity cost. You may find thousands in unbilled work every month.

Define “Standard Service” Clearly
Document what’s included and what’s not - in each service or package you offer. Communicate this clearly in proposals, onboarding and contracts.

When everyone knows the rules, it's easier to hold the line.

Create a Pricing Structure for Extras
Give customers a clear path to “yes” - at a price. This might include -

• Additional fees for urgent turnaround

• Add-ons for premium support

• Project changes beyond initial scope

• Tiered service levels

You’re not saying no - you’re saying yes with structure.

Train Your Team to Hold Boundaries with Confidence
Often it’s frontline staff who cave to pressure. Give them -

• Scripts for saying no gracefully (“That’s outside our standard package, but here’s how we can help.”)

• Permission to escalate instead of over-promising

• Support when they do hold the line

Confidence in boundaries must be modelled by leadership and backed up consistently.

Protect Top Clients with Value-Add, Not Scope-Creep
It’s okay to do a little extra - when it’s strategic. But do it by design, not default. Surprise and delight is a strategy. Over-service is a liability.

Psychological Perspective
Over-service is often driven by fear and identity.

Fear of losing a client. Fear of conflict. A deep-rooted belief that “good business is saying yes,” and in many SMEs, especially owner-led ones, there’s a blurred line between service and self-worth.

But here’s the reality boundaries are not a betrayal of your values - they’re an expression of them. They show respect for your time, your team and your client.

People trust businesses with boundaries. They may not like a “no” in the moment, but they respect it in the long run and come back for it.

HR Best Practice
Over-service burns out teams fast. It creates resentment, confusion and fatigue -especially when there’s no recognition or reward for the extra work.

HR can support by -

• Mapping service boundaries in role descriptions and onboarding

• Coaching staff on boundary-setting language

• Protecting team wellbeing by monitoring workload creep

• Rewarding effective communication, not just “heroic” over-extension

Also check how leadership talks about service. If “we always go the extra mile” is celebrated without limits, over-service becomes the culture.

Red Flags to Watch For and Mitigate Against
You may be over-servicing if -

• Clients frequently expect more than was agreed

• Staff are redoing work for free

• You avoid invoicing for time because “it wasn’t their fault”

• Deadlines stretch due to scope creep

• High-effort clients yield low profit

• Staff feel like they’re “always bending over backwards”

These aren’t signs of care - they’re signs of a business bleeding energy and margin.

Narrative Story - Meet Sarah from Hamilton
Sarah runs a boutique PR agency in Hamilton. Her team prided themselves on responsiveness - quick turnarounds, weekend calls, unlimited edits.

But burnout was rising. Profit margins were slipping and their best clients were starting to feel neglected.

Sarah did a service audit. Found that on average, her team was providing 28% more work than was quoted or contracted. She restructured her packages, added an “express lane” service with a premium and trained her team in how to set expectations.

Within a quarter -

• Workloads stabilised

• Profit margin increased by 19%

• Client satisfaction improved, thanks to clearer boundaries and faster communication

Sarah says - “I thought we were over-delivering as a strength. Turns out, we were undercharging as a habit. Boundaries changed everything.”

Golden Nugget
Exceptional service doesn’t mean endless service - it means clear, intentional service with well-respected limits.

If you’d like a confidential, free of charge, free of obligation conversation about your business, here’s how to get me.

 📞 Phone +64 275 665 682
✉️ Email john.luxton@regenerationhq.co.nz
🌐 Contact Form www.regenerationhq.co.nz/contact

If you’d like to read more RegenerationHQ thinking on SME business and other things, go here – www.regenerationhq.co.nz/articlesoverview

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Supporting NZ SME Owners to Exit Well, Lead Better and Build Business Value.