Calculate Cost-to-Serve Before Renewal

The commercial team must decide whether to renew a high-revenue account at the current price, reprice the renewal, or narrow service scope after finance finds that custom reporting, support escalations, and billing corrections may be consuming the apparent margin. Activity-Based Costing The common shortcut is to average the economics, hide the key assumption, and present a single answer that looks precise but cannot be managed. Step 1 Start with account revenue and direct product cost. This gives the familiar gross margin baseline but not the full service economics. Step 2 Trace activity costs: onboarding hours, support tickets, reporting requests, and…

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