A cost driver is a factor that causes a change in the cost of an activity, product, or service. It is a variable that influences the total cost of a particular process or operation. Understanding cost drivers is essential for businesses to identify areas where costs can be reduced or optimized.
This shift reveals the truth: A customer who orders 1,000 units once a month is vastly more profitable than a customer who orders 10 units 100 times a month. The volume is the same; the transactional cost driver is different. what is a cost driver
If your freight costs are too high, you cannot simply order the freight costs to go down. You must attack the driver. Do you reduce the distance? Do you increase the density of the packaging (changing the dimensional weight driver)? Do you switch carriers? A cost driver is a factor that causes