Cost Center

A Cost Center is an organizational unit of a company in which costs are collected, planned and accounted for, such as a department, a division or a team. It answers the question of where costs arise and thus creates the basis for budget responsibility and internal charging.

In IT charging, cost centers are the typical recipients: services consumed are valued with volumes and rates and shown to or charged against the cost centers as part of IT Charging and Billing. Posting follows the account assignment logic defined in the company, so that the charges become visible in the ERP system and in the reports of those responsible.

The cost center must be distinguished from the cost object, which denotes products or services for which costs are incurred, and from the profit center, which additionally bears revenue responsibility. In Chargeback models, the cost center structure makes cost responsibility concretely addressable.