Any company in our industry is better off when they have a rough idea of every customer’s profitability. How else can prices and terms, the most important determinant of customer profitability, be set in a rational fashion? Clearly, to make a profit, revenue has to be higher than the costs of serving the customer, so it is critical to know what those costs are.
 
OVERVIEW
 
Broadly speaking, there are three categories of costs of serving customers.
 

• The cost of providing the products that the customer uses, which includes material costs ...