Customer Concentration Analyzer
Paste revenue by customer and get top-1, top-5, and top-10 concentration, a Herfindahl index score, and the revenue you would lose if your largest account left. The board asks this before every raise.
How do I measure customer concentration risk?
Calculate what share of total revenue your largest customer represents, then the top five and top ten combined. A common comfort zone is no single customer above 10% and the top ten below 50%. The Herfindahl-Hirschman Index adds a single summary score by squaring each customer's percentage share and summing them, which captures the whole distribution rather than an arbitrary cut-off, and it moves sharply when one account becomes dominant.
How to use this tool
- 1
Paste revenue by customer
One per line: customer name and annual revenue. Order does not matter.
- 2
Read the concentration profile
Top-1, top-5, and top-10 share, an HHI score with a risk band, and the full ranked contribution.
- 3
Check the loss scenario
See the revenue you would lose if the largest one, three, or five accounts left.
Revenue concentration understates profit concentration
Concentration is more dangerous than the headline percentage suggests, for four reasons that a simple top-ten table does not surface.
Entity versus parent
Several accounts belonging to one parent company represent a single procurement decision and a single point of failure. Measured at entity level they look diversified. Always roll up to the ultimate parent.
Profit concentration exceeds revenue concentration
Large customers are often served at better margins because fixed costs are spread further. Losing 12% of revenue can mean losing 25% of EBITDA, and the revenue percentage alone understates the damage.
Renewal timing clusters risk
Three large contracts all renewing in the same quarter is a materially different risk from the same three staggered across a year. The concentration table never shows this.
Direction matters more than level
Concentration at 40% that has fallen from 60% is a company successfully diversifying. The same 40% rising from 25% is the opposite. A single snapshot cannot distinguish them.
Numbers to sanity-check against
These thresholds are general commercial and regulatory conventions rather than audited benchmarks. Acceptable concentration varies substantially by business model: enterprise businesses with few large contracts operate very differently from high-volume SMB businesses.
Concentration is a symptom, not the diagnosis
This measures your exposure today. What a board really wants to know is whether the largest accounts are healthy, when they renew, how their spend has trended over two years, and how much of your profit rather than your revenue sits with them. Answering that means joining revenue to contract terms, usage, support history, and margin by account: a different join every time, and one that has to be redone before every board meeting and every raise.
See how DataWyse answers thisQuestions finance teams ask about this tool
How does a customer concentration risk calculator work?
Sort revenue by customer descending, then express the top 1, top 5, and top 10 accounts as a percentage of total revenue. Add a Herfindahl-Hirschman index: the sum of each customer's squared revenue share , for a single dispersion score. Most lenders and acquirers start asking questions once a single customer exceeds 10 to 20% of revenue.
What is a healthy level of customer concentration?
A frequently used comfort zone is no single customer above 10% of revenue and the top ten below 50%. Above 20% for a single account, most investors and acquirers will treat it as a material risk requiring specific diligence. The right level depends heavily on your model: enterprise businesses naturally run more concentrated than volume ones.
What is the Herfindahl-Hirschman Index?
A concentration score calculated by squaring each customer's percentage share of revenue and summing the results. It ranges from near zero for a highly fragmented base to 10,000 for a single customer. Squaring the shares means it responds sharply to one account becoming dominant, which a simple top-ten percentage does not.
Why does customer concentration matter to investors?
Because it determines how much of your forecast depends on decisions you do not control. A business where one customer can remove a quarter of revenue with a non-renewal is valued differently from one where no single decision moves the plan, regardless of current performance.
How do I reduce customer concentration?
Either grow the rest of the base faster than the largest accounts, or deepen contractual commitment with the large ones: longer terms, staggered renewals, multiple stakeholders. Deliberately shrinking a large healthy customer is almost never the right answer; the goal is to make the rest of the business grow around them.
Is this tool really free?
Yes. No signup, no email required, no usage limit. It runs entirely in your browser: nothing you type is uploaded to a server or stored anywhere. We build these because the people who find them useful are the people who eventually need a financial analyst that works the same way.
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