Cost to Serve
Cost to serve is the total cost of fulfilling and supporting a specific customer, channel, or order type, including fulfillment, shipping, returns, customer service, and channel fees.
Why it matters for ecommerce brands
Cost to serve shows which channels and customers actually make money once every handling, return, support, and channel cost is assigned to them. A blended cost per order hides that marketplace, wholesale, and subscription orders cost very different amounts. It drives pricing, minimum order sizes, and which channels to grow. For example, $60,000 of fulfillment, shipping, returns, support, and channel fees across 5,000 orders in one channel is $12 per order. If DTC averages $9, that channel needs higher prices or lower costs.
Formula and calculator
Cost to serve per order (channel) = (fulfillment + shipping + returns processing + customer service + channel fees) ÷ orders in that channel
Common questions
- Why is cost to serve different from cost per order?
- Cost per order is usually a single average of fulfillment and shipping. Cost to serve assigns all handling, returns, support, and channel costs to a specific segment, so it reveals differences between, for example, Amazon, wholesale, and DTC customers.
- How do you calculate cost to serve?
- Add fulfillment, shipping, returns processing, customer service, and channel fees for one channel or segment, then divide by its orders. $60,000 over 5,000 orders is $12 per order.
- How do you allocate shared costs like customer service to channels?
- Use a driver that matches the work, such as tickets per channel for support and orders or units for warehouse labor. Keep the method the same each period so trends are comparable.