Field notes on cost truth, pricing and the future of costing.
What we're learning across 150 engagements, written for finance leaders, not for footnotes.
Latest field notes
What Does It Really Cost to Serve an AI Feature?
Ship an AI feature and the first invoice from the model provider tells you almost nothing about what it actually costs to...
What Is a Cost Driver and How Do You Choose the Right One?
Every costing model rests on a handful of choices about what causes cost, and most of those choices were made quickly, by...
Using an LLM to Draft a Cost Model, and Where It Gets It Wrong
Ask a large language model to draft a TDABC cost model and it will happily produce one: cost pools, candidate drivers, a...
How to Move From Spreadsheets to a Real Costing Model
Almost every costing model starts in a spreadsheet, and that is the right place to start. A spreadsheet is where you find...
Cost Accounting vs Management Accounting: The Real Difference
Two finance functions can produce the same monthly pack and mean entirely different things by it. One is reporting what the last...
How to Calculate the True Cost of a Discount
Every discount you grant is a cost decision wearing the clothes of a pricing decision. It is signed off in a sales...
How to Price a New Product Using Cost Data
Pricing a new product is the commercial decision you make with the least evidence available. There is no sales history, no margin...
How to Identify Your Unprofitable Customers
Every company has them. A handful of customers who buy regularly, pay their invoices, appear on the sales team’s list of wins,...
What Data Do You Need to Start Activity-Based Costing?
Activity-based costing projects rarely stall on method. They stall in the third week, when somebody asks what data the model will need...
Gross Margin vs Contribution Margin vs Net Margin, Explained
Three numbers on the same income statement are all called margin, and managers quote them interchangeably in the same meeting. Then they...
Marginal Costing vs Absorption Costing: Which to Use and When
Two businesses can spend exactly the same money in a month and report two different profits. Not because one cheated, but because...
How to Allocate Overhead Without Distorting Product Cost
Most product costs are wrong in the same quiet way. A single overhead rate spreads indirect costs evenly across everything you make,...
What Is Cost-to-Serve and How Do You Reduce It?
Two customers can buy the same product, at the same price, in the same quantity, and still leave you with completely different...
How to Calculate Customer Profitability: A Step-by-Step Guide
Most companies know their total profit to the cent, yet cannot tell you which customers create it and which quietly erode it....
Cost Allocation in Healthcare: Why Standard Methods Produce Misleading Results
Two patients can share the same diagnosis, the same procedure code and the same length of stay, and still cost the hospital...
The Whale Curve Revisited: How to Read It and What to Do Next
The month-end pack says exactly how much profit you made. It says nothing about who made it, and who quietly gave part...
How to Present Profitability Data to Your Board (Without Losing the Room)
You built the model. The numbers are right. Then you present them to the board and watch the energy drain from the...
Profitability by Channel: Why Direct Sales, Distributors and E-commerce Rarely Have the Same Margin
Most companies know their margin by product and, if they are lucky, by customer. Far fewer know their margin by channel, and...
3 Signs Your Business Is Ready for a TDABC Implementation
Time-Driven Activity-Based Costing is not for everyone, and it is not for every moment in a company’s life. Some businesses are simply...
Why Excel is Killing Your Profitability Model (And What to Use Instead)
Almost every profitability model starts life in Excel. It is where the first cost breakdown gets built, where the first margin surprise...
How to Measure the ROI of a Profitability Improvement Project
A profitability improvement project is easy to approve and surprisingly hard to prove. The costs are concrete and land early: consulting fees,...
The 4 Maturity Levels of Cost Management: Where Is Your Business?
Every business manages its costs somehow. The difference between one that grows margin deliberately and one that hopes for the best is...
Manufacturing Margins in 2026: Why Tariff Volatility Makes Real Costing Non-Negotiable
For most manufacturers, the gross margin printed on the annual accounts is an average that hides far more than it reveals. In...
The return you did not price
Field note · Supply chain cost The return you did not price: quality, returns and rework in high-frequency ordering. More orders mean...
When small and frequent is right
Field note · Supply chain cost When small and frequent is right: order frequency versus opportunity cost. The previous field note argued...
Time is money: the hidden cost of a thousand small orders
Field note · Supply chain cost Time is money: the hidden cost of a thousand small orders. Every order you place is...
What Our TDABC Workshop Participants Learn in 8 Hours
In eight hours, a finance manager who arrives convinced their costing is “good enough” usually leaves with a list of three or...
Strategic Costing vs. Accounting: Why One Runs the Business and the Other Files the Tax Return
Every company keeps accounts. Far fewer practise costing. The two are often confused, and the confusion is expensive: it leaves managers steering...
How Often Should You Update Your Cost Model? A Frequency Guide by Business Type
“We built the model two years ago” is one of the phrases most likely to indicate a cost model problem. Not always...
Logistics Companies: How to Know Which Routes Are Actually Profitable
Most logistics companies know their overall margin to the decimal point. Very few can tell you which routes earn it and which...
IAS 2 normal capacity: stop overstating your inventory
IAS 2 requires fixed production overheads to be allocated to the cost of inventory on the basis of the normal capacity of...
IFRS 18 in 2027: your management metrics now have to be defensible
IFRS 18 is effective for reporting periods beginning on or after 1 January 2027, and it replaces IAS 1. It is the...
IFRS 8 segment profit is only as good as the cost behind it
IFRS 8 requires you to report a measure of profit or loss for each reportable operating segment, as it is reported to...
IAS 36 impairment and inventory NRV both rest on attributed cost
Two everyday IFRS judgements depend quietly on the quality of your cost allocation: impairment testing under IAS 36, and the net realisable...
Data Infrastructure for Cost Modeling: What You Need Before You Can Model
One of the most common barriers to implementing a proper cost model is the belief that you don’t have the data. Most...
Why your Balanced Scorecard fails without real cost
Two of the Balanced Scorecard's four perspectives depend on real cost, which most scorecards do not have. Here is how TDABC supplies...
The Execution Premium: strategy meets money at Stage 4
Kaplan and Norton's six-stage system has one place where strategy meets money: Stage 4, Plan Operations. Here is why it needs real...
Kaplan’s complete system: from cost to strategy to execution
ABC/TDABC, the Balanced Scorecard, Strategy Maps and the Execution Premium are one connected system. Robert Kaplan is the thread, and cost is...
Why Value-Based Health Care fails without TDABC
Value-Based Health Care fails when providers measure outcomes but not real costs. Here is why TDABC is the missing half of the...
Lean saves time. TDABC tells you the profit gained.
Lean and Six Sigma find the minutes. TDABC tells you whether those minutes became profit, and where. Here is how the two...
What Is a Capacity Cost Rate in TDABC and Why Does It Change Everything?
Ask most finance teams what something costs, and they’ll point to a rate buried in a spreadsheet. Ask where that rate came...
How to measure the cost of a cycle of care: a 7-step TDABC guide for hospitals
A practitioner walkthrough of the 7-step TDABC method for measuring the true cost of a cycle of care, applied to one illustrative...
Why Lean and Six Sigma succeed operationally, fail financially
Lean and Six Sigma projects often work on the floor but never reach the P&L. Three reasons why, and how TDABC closes...
From shop floor to boardroom: profitability after a Kaizen
One Kaizen affects transactions, products, customers and channels differently. TDABC lets you watch a single improvement cascade up every level.
From ERP to ESG - Using Your Financial Data for Sustainability Reporting
Your ERP and financial data already contain the building blocks for CSRD reporting. How TDABC turns accounting data into audit-ready ESG cost...
How to Allocate Environmental Costs by Activity - A TDABC Approach
Step-by-step guide to allocating environmental costs (energy, waste, emissions) with TDABC. Includes a worked example for CSRD compliance.
Capacity Utilisation in TDABC: The Metric Most Models Ignore
Most cost models tell you what things cost. TDABC tells you something more useful: how much of your capacity is actually being...
From Gut Feel to Model: How a Hospital Group Found 18% Hidden Losses
The CFO of a mid-sized hospital group told me something I’ve heard more times than I can count: “We know roughly where...
From Gut Feel to Model: How a Hospital Group Found 18% Hidden Losses
The CFO of a mid-sized hospital group told me something I’ve heard more times than I can count: “We know roughly where...
From Gut Feel to Model: How a Hospital Group Found 18% Hidden Losses
The CFO of a mid-sized hospital group told me something I’ve heard more times than I can count: “We know roughly where...
Scenario Modeling for Strategic Decisions: Use Your Cost Model Before You Commit
Every major strategic decision changes your cost structure. A new product line, a new market, a major hire, a pricing change, a...
The Data You Need to Build a TDABC Model (And What You Can Skip)
Insights · TDABC Building a TDABC model requires five data sources: the general ledger, payroll by department, operational transaction data, capacity estimates,...
Cost Data in Pricing Decisions: Stop Guessing, Start Knowing
Most pricing decisions are made with incomplete information. Companies know their market price, their competitor’s approximate price, and their gut feeling about...
How Retail Chains Can Stop Losing Money on “Popular” Products
The Popularity Trap Walk into any retail chain’s head office and ask which products are performing well. You will hear the same...
Cost Model Governance: How to Keep Your Model Accurate After Year One
Why Models Go Stale Building a cost model is the easy part. The hard part is keeping it alive. Most organisations that...
5 Questions Every CFO Should Ask Before the Next Budget Cycle
The Budget Ritual Nobody Questions Every year, finance teams across the world repeat the same exercise: take last year’s numbers, apply an...
Customer Profitability Analysis: Beyond Revenue, Toward True Margin Per Client
The Whale Curve in Practice In most companies, the relationship between customer rank and cumulative profitability follows what Kaplan and Cooper called...
Why Your Best Clients May Be Your Worst - A Cost-to-Serve Analysis
Every company has a few clients they call their best. They generate the highest revenue, they’ve been around the longest, and the...
Indirect cost allocation: the method changes the answer
What Are Indirect Costs, Exactly? Indirect costs are expenses that cannot be directly traced to a single product, client, or service - ...
TDABC in Professional Services: How Law Firms and Consultancies Find Their Real Margins
The Billable Hour Is Not a Profitability Model Most professional services firms - law firms, management consultancies, accounting practices, engineering firms - ...
What Finance Teams Get Wrong About Overhead Allocation
Ask any CFO how their business allocates overhead, and you’ll likely get a confident answer. Ask how accurate that allocation actually is,...
The Hidden Cost of Complexity: Why More Products Usually Means Less Profit
Most businesses assume that a broader product or service portfolio means more revenue opportunities. Add a new SKU, launch a service variant,...
How to Know if Your Pricing Is Killing Your Profits
Most businesses price in the dark. Here are 5 signs your pricing is eroding margins - and how TDABC gives you the...
The Excuse Factory: 7 Barriers to Profitability (And the Truth Behind Each One)
Companies that adopt TDABC see a real improvement in EBIT. So why do most companies never start? The Excuse Factory never closes....
TDABC explained: the practical guide for business leaders
If you run a business and suspect your product or service costs don’t reflect reality, you’re not alone. Most companies use traditional...
The Whale Curve: find which clients make and destroy your profit
Imagine discovering that 20% of your clients generate 150 to 300% of your total profit, while 30% are actively destroying it. Sounds...
Cost-to-serve analysis: how to know what each client really costs
How much does it really cost to serve each of your clients? If your answer is “I don’t know” or “roughly the...
The Future of Cost Management: Where TDABC, Software, and AI Converge
For decades, cost management has been stuck in a paradox. Every CFO wants accurate product and customer profitability data, yet most organisations...
Cost Intelligence for Clinics: How Visibility Drives Better Profit Decisions
When clinic managers think about improving profitability, the instinct is almost always the same: grow revenue. Attract more patients, add new services,...
New Tariffs and Cost Chaos: Why Simulation-Ready Costing Models Matter
When new tariffs are announced, the same pattern repeats in manufacturing companies around the world. Finance teams scramble to open spreadsheets. They...
From Actuals to Simulations: Building a Strategic Costing Layer Above Your ERP
Every manufacturer with an ERP system has access to an enormous volume of cost data. Purchase orders, production orders, labour records, material...
Transforming Dental Clinic Profitability: A TDABC Case Study
Healthcare is one of the sectors where the gap between perceived profitability and actual profitability is widest. Dental clinics are no exception....
Profitability Is Not an 80/20 Game: Why the Pareto Rule Misleads in Cost Management
The Pareto principle is one of the most widely cited rules in business. 80% of your profit comes from 20% of your...
Gross Margin vs. Net Profitability: Why Your Customer Profitability Numbers Are Probably Wrong
If you measure customer or product profitability based on gross margin, you are almost certainly making decisions with incomplete information. It is...
The Top Requirements for a Successful TDABC Project: Data, People, and Methodology
Time-Driven Activity-Based Costing projects fail for predictable reasons. After working on TDABC implementations across multiple industries, the pattern is clear: success depends...
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A distributor in New Zealand. €1.335M of cost-to-serve made visible, then halved, and 830 loss-making customers brought down to 295.
Read the case study →Who you would be talking to
Miguel Guimarães, Founding Partner
Cost and profitability practitioner for 25+ years. Presented the Damco cost-to-serve case at Managing for Profit (Amsterdam RAI, December 2009), on the same programme as Robert S. Kaplan.
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