What is Average Cost of Service (ACS)?

  • SaaS

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.

R&D Offer Quiz

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Answer to find out if you're eligible for R&D tax credits.

Do the activities performed relate to a new or improved business component’s function, performance, reliability, quality, or composition?(Required)
For Example: A mid-sized packaging company develops a slightly modified cardboard box design to improve its stacking strength (reliability) for warehouse storage, involving minor adjustments to the corrugation pattern to reduce collapse under standard weight loads.
Is your company trying to discover information to eliminate uncertainty concerning the capability or method for developing or improving a business component?(Required)
For Example: A furniture manufacturer investigates whether a cheaper wood adhesive can hold joints as effectively as the current one during assembly, testing bond strength to resolve doubts about its capability in standard production lines.
Do the activities performed constitute a process of experimentation?(Required)
For Example: An auto parts supplier runs a series of bench tests on different lubricant formulations to find one that reduces friction in engine bearings more effectively, systematically comparing wear rates over simulated operating cycles.