Cost Driver [cracked] -

If you try to manage the cost (salaries) without managing the driver (tickets), you will always be behind.

When you stop staring at the expense report and start staring at the activity that creates the expense, you stop being a victim of your costs. You become the manager of them. cost driver

A cost driver is not an accounting buzzword. It is a . If you try to manage the cost (salaries)

If you don’t know what drives your costs, you will under-price your products. For a logistics company, if the cost driver is delivery stops (not miles driven), then a customer with 20 stops in one neighborhood costs way more than one with 1 stop across town. Price accordingly. A cost driver is not an accounting buzzword

| Industry | Cost | Cost Driver | | :--- | :--- | :--- | | Restaurant | Electricity bill | Number of covers (guests served) | | E-commerce | Shipping fees | Number of boxes shipped OR weight | | Hospital | Nursing staff | Patient days (total nights in beds) | | Law firm | Paralegal time | Number of documents reviewed | | Manufacturing | Machine maintenance | Machine hours run |

A is the unit of activity that causes a cost to change.

What the Heck is a Cost Driver? (And Why It’s the Secret to Real Profitability)