Free tool

Cost‑to‑Serve Calculator

Is one customer really profitable once the cost of serving it is counted? Enter a few annual figures and find out in under a minute.

Gross margin tells you what a customer pays above the cost of the goods. It says nothing about what it costs to serve them: the orders you process, the lines you pick, the trucks you send, the returns you handle and the cash you wait for. Two customers with the same margin can cost very different amounts to serve, and the ones that order small and often are usually the ones that quietly lose money.

One customer or segment, per year

$
%
Orders placed in a year
Average products per order
Trips or shipments to this customer
days
Days until you are paid
Adjust assumptions

Illustrative estimates for a typical distributor. If you know your own costs, use them.

$
Order entry and customer service
$
Picking, packing and handling
$
Freight and last mile
$
Collection, inspection, restocking
% a year
Your cost of borrowing or capital
 

Get the fixes for this customer

The price, delivery and order-size changes that would make it profitable, worked out with your numbers.

One email with your numbers, from demo@profitkeel.com. No mailing list, and your figures stay in your browser unless you send them.

Gross profit–
Cost to serve–
Net profit after cost to serve–
Net margin–
From gross profit to net profit
Cost to servePer year% of revenue
Your whole customer base

Want this across all your customers?

This calculator uses averages for one customer. Our fixed-fee diagnostic uses your real costs and volumes for every customer, ties to your ledger and shows where to act.

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Method

How this is calculated

All figures are annual, for one customer or segment.

  • Gross profit = revenue × gross margin
  • Order handling = orders × cost per order
  • Picking and handling = orders × lines per order × cost per line
  • Delivery = deliveries × cost per delivery
  • Returns = returns × cost per return
  • Payment terms = revenue × (days ÷ 365) × cost of capital: the cost of the cash you wait for
  • Cost to serve = the sum of the five costs above
  • Net profit after cost to serve = gross profit − cost to serve; net margin = that ÷ revenue

The verdict: profitable if net margin is 3% or more, marginal between 0% and 3%, likely losing money below 0%. The reason names the largest cost.

These results are estimates for illustration, based on the figures and assumptions you enter. They are not financial advice. Real cost to serve depends on your own costs, processes and data; our diagnostic measures it from your ledger.