Cost centre

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Cost centers are divisions that add to the cost of the organization, but only indirectly add to the profit of the company. Examples include Research and Development, Marketing and Customer service. A cost center is often identified with a speed type number.

Because the cost center has a negative impact on profit (at least on the surface) it is a likely target for rollbacks and layoffs when budgets are cut. Operational decisions in a contact center, for example, are typically driven by cost considerations. Financial investments in new equipment, technology and staff are often difficult to justify to management because indirect profitability is hard to translate to bottom-line figures.

Business metrics are sometimes employed to quantify the benefits of a cost center and relate costs and benefits to those of the organization as a whole. In a contact center, for example, metrics such as average handle time, service level and cost per call are used in conjunction with other calculations to justify current or improved funding.

[edit] Speed type

A number which identifies a cost center or an organization like a company of a university. This number is often used in expense forms.