Allocate Overhead Fairly or Not?
Choose a stronger costing approach when simple volume-based allocations hide the true economics of different offerings.
1x self-serve setup effort 4x enterprise support hours Same current overhead per customer What is the strongest response when overhead is being allocated equally but work is consumed very differently? Shift to driver-based costing using implementation hours, exception counts, and support effort Keep the equal allocation because simplicity matters more than economic truth Stop allocating overhead at all and assume pricing can ignore implementation complexity Reduce enterprise pricing pressure by spreading even more cost into self-serve accounts Driver-based costing is strongest when segments consume shared resources unevenly. It gives a truer signal for pricing, packaging, and process decisions than a…
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