Average Cost of Service (ACS) is the average expense your company incurs to deliver your SaaS product or service to each customer. It includes costs like hosting, support, and infrastructure. Knowing your ACS helps you price your product effectively and maintain healthy profit margins as you scale.
For example, if a telecommunications company spends $1 million monthly on infrastructure, maintenance, and staff to serve 10,000 customers, their ACS would be $100 per customer. Companies use ACS to identify cost reduction opportunities, set competitive prices, and evaluate profitability across different service lines.
Calculating ACS involves adding all direct and indirect costs, then dividing by service units. Regular monitoring helps businesses maintain healthy profit margins while staying competitive in their markets.