Cost Driver !free! File

| 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.

So, what’s your biggest cost driver this quarter? Go find it. Then go reduce it. Enjoyed this? Share it with a founder who just asked “where did all our cash go?” cost driver

Have you ever looked at your monthly P&L statement and thought, “Revenue is up, so why is our profit margin shrinking?”

If you don’t know what your cost drivers are, you aren’t managing your business. You’re just reacting to it. | Industry | Cost | Cost Driver |

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.

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

Traditional budgets just add 5% to last year’s numbers. Driver-based budgeting asks: “If we increase sales by 20%, how many more customer service calls will that generate?” You can now predict costs before they happen.