Shared services (IT, HR, finance, procurement) are recharged to business units by blunt keys like headcount or revenue. So a lean unit that barely uses the service subsidises a heavy one, the chargeback feels arbitrary, and the service centre gets no signal to be efficient. We cost shared services by activity and transaction with TDABC, so each unit pays for what it actually consumes and the recharge becomes something both sides can defend.
Cost and Profitability Consulting · 150+ models since 2010 · TDABC
A shared service exists because it is cheaper to run once for everyone than many times over. The catch is the recharge. Split the cost by headcount, revenue or a flat percentage and you are assuming every unit consumes the service in proportion to its size, which almost never holds. One unit logs three thousand tickets a year; another logs ten. They get the same bill.
So the light user quietly subsidises the heavy one, the recharge looks like a tax rather than a price, and finance spends the budget cycle defending a number nobody believes. Worse, the service centre sees no link between what it does and what it charges, so it has no reason to get leaner.
CHARGED VS CONSUMED, BY UNIT
Illustrative. Every unit is recharged the same flat amount. True cost by consumption shows two units overpaying and subsidising two that use far more than they are charged.
Two business units have the same headcount, so the IT shared service recharges them the same amount. On the cost report they look like equal consumers of central support.
Unit A is stable and self-sufficient, with few tickets and no custom systems. Unit B runs three bespoke applications, raises three times the tickets and drives most of the integration work.
Cost the activity each one consumes and Unit A is paying well above its real cost while Unit B is paying well below, funded by everyone else.
Recharge by activity, publish the unit rates, and let units see the transactions behind the bill. The cost does not move; who pays for it finally matches who causes it.
| Unit A | Unit B | |
|---|---|---|
| Headcount | 200 | 200 |
| Recharge (headcount key) | €420,000 | €420,000 |
| Tickets & requests / year | 3,100 | 9,400 |
| Custom apps supported | 0 | 3 |
| True cost (TDABC) | €248,000 | €712,000 |
| Over / under recovery | +€172,000 overpaid | −€292,000 underpaid |
On the headcount key the two units are identical line items. By consumption, one is paying a third more than it should and the other little more than half its real cost. Only an activity view makes the subsidy visible, and arguable.
FROM SPEND TO WHAT EACH UNIT RECEIVES
Illustrative. A shared-services budget re-expressed from what it buys, to the services it runs, to the value delivered to each part of the business, so the recharge traces all the way back to spend.
The activities the shared service actually performs: tickets, onboarding, payroll runs, purchase orders, application support, the work the budget pays for.
TDABC sets a cost per ticket, per run, per support hour from practical capacity, so idle and excess capacity is visible instead of buried in the recharge.
Each business unit carries the cost of what it actually consumed, transaction by transaction, not a share of the total by size.
Unit rates and a clear bill turn the recharge into an internal price, which both units and the service centre can plan and improve against.
When the recharge reflects consumption, the budget conversation stops being about fairness and starts being about demand. Heavy users have a reason to consume smarter, light users stop subsidising them, and the service centre can benchmark its unit rates and justify its headcount with a number rather than a story.
The model is built on your data and handed over, so the chargeback stays current as demand shifts.
The Profit Check takes five minutes and no data upload. It points to where your internal recharges are most likely out of line with consumption, and what it is worth to put them right.