Cost to Serve Calculator
Work out what each customer, order or account costs to serve.
What this calculator does
Costs are those the organisation assigns to serving customers. Margin per customer is shown only when revenue is entered; it is never estimated.
Inputs and what they mean
- Currency
- — Amounts are shown in the currency you pick. No exchange rate is applied..
- Service and delivery labour cost
- — number value.
- Support and account management (optional)
- — Optional component. Leave at 0 to exclude it from the result..
- Software, tools and platform cost (optional)
- — Optional component. Leave at 0 to exclude it from the result..
- Delivery, travel and logistics (optional)
- — Optional component. Leave at 0 to exclude it from the result..
- Overhead applied to direct cost (optional)
- — Optional component. Leave at 0 to exclude it from the result..
- Customers, orders or accounts served
- — number value.
- Revenue from those customers
- — Optional. Leave at 0 to see cost only..
How to use it
- Enter your own figures — the calculator never fills in a rate, price or benchmark for you.
- Press Calculate to see the result.
- Read the formula, variables, assumptions and source below the result before you rely on it.
Formula
Total cost to serve = (Service labour + Support + Tools + Delivery) × (1 + Overhead rate); Cost per customer = Total cost to serve ÷ Customers
Worked example
Serving 240 accounts in a month
Revenue is optional; leave it blank to see cost only.
Reading the result
The headline figure is the main answer. Any breakdown underneath shows the parts that make it up, so you can check the working and see what changes when you adjust an input.
Limitations and assumptions
Results depend entirely on the figures you enter and are rounded for display. They are for general information and education, not professional advice.
Reference: Rice University — Principles of Accounting, Volume 2: Managerial Accounting
Last reviewed:
Common questions
Formula, source and verification
Service costs are accumulated, overhead applied, and the total divided by the number of customers, orders or accounts served.
The question it answers: What does each customer, order or account cost us to serve?
The formula
Total cost to serve = (Service labour + Support + Tools + Delivery) × (1 + Overhead rate); Cost per customer = Total cost to serve ÷ Customers
- L — Service and delivery labour
- (currency). Cost of the people serving customers.
- P — Support and account management
- (currency). Optional support cost.
- S — Tools and platform
- (currency). Optional software cost.
- D — Delivery, travel and logistics
- (currency). Optional delivery cost.
- o — Overhead rate
- (%). Overhead applied to direct cost.
- n — Customers served
- (count). Customers, orders or accounts in the period.
- R — Revenue
- (currency). Optional revenue from those customers.
Units: Currency; counts; percentages.
What kind of calculation this is
Deterministic formula. The same inputs always give the same answer. The maths is fixed and does not depend on judgement.
Method
Costs are those the organisation assigns to serving customers. Margin per customer is shown only when revenue is entered; it is never estimated.
Assumptions built into the result
- Mathematical: Costs and the customer count cover the same period.
Figures this calculator will never guess for you
- No industry-average rate, margin, overhead or ticket volume is inserted.
- No optional component is filled in on the user's behalf.
Limitations
- An average across customers; activity-based costing is needed to see which customers cost most.
Source and version
- Standard or reference
- Cost accumulation, cost-plus pricing, margin and markup (OpenStax, Principles of Accounting Volume 2: Managerial Accounting — job order costing, cost-plus pricing, margin and markup.)
- Published source
- Rice University — OpenStax (CC BY)
- Formula version
- Version 1
- Verification
- Reviewed against the cited source on
- How much weight the source carries
- Academic
- Applies to
- Currency
- Amounts stay in the currency you choose; no exchange rate is applied.
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