Cost Driver Now

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?”

The culprit isn’t a villain. It’s a . cost driver

If you try to manage the cost (salaries) without managing the driver (tickets), you will always be behind. So, what’s your biggest cost driver this quarter

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

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.

| 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 |