Cost center
Cost center (also cost center ) is a term taken from the English cost center for an independent business unit, which normally has a budget available to achieve its goals. In this sense, a cost center can comprise one or more cost centers , but is not to be understood as a synonym. However, in other contexts, Costcenter is also used as a literal English translation and synonymous with “cost center”; then it is different from the meaning described in this article.
Cost centers are run in a cost-focused manner and have interfaces to other types of centers . Your services must meet defined standards, e.g. B. in relation to the quality of the services and the associated lead times. Cost centers have their own budget and cost responsibility and must therefore be able to influence the relevant cost drivers . Cost centers are internal service providers whose services often cannot be reasonably “sold” on the internal “market”. The services they provide may be used by other centers is not obtainable in the external market, therefore the term "internal monopoly service providers." Reasons for this can be B. Confidentiality in research and development. Cost centers are often core competence areas that management does not want to expose to pressure from external competition. It is conceivable, for example, to run the marketing department of a company as a cost center - cost responsibility is possible, but the attribution of revenues, as in the case of investment centers or profit centers , is rather difficult.
Ultimately, the cost center aims to achieve maximum cost minimization through cost transparency ("what costs what?").