Cost Allocation

Distributing indirect costs A working definition from the RGM marketing glossary.

Schematic — Cost Allocation

Distributing indirect costs

Failure modes to watch

Keep this in mind.The errors with Cost Allocation are predictable: one blanket rule, no context, chasing the word, raw benchmarks. Each is avoidable.

One blanket rule. Applying Cost Allocation the same way everywhere. Split it by audience, channel, and business model.
No anchor. Quoting Cost Allocation without a starting point. Always pair it with a baseline.
Wrong target. Treating Cost Allocation as the goal. The goal is the outcome it predicts.
Apples to oranges. Comparing Cost Allocation across firms raw. Adjust for pricing and cycle before you read it.

How is Cost Allocation defined?

Distributing indirect costs In short, fix that meaning before any tactic is debated.

What makes Cost Allocation worth knowing?

Cost Allocation shows up in budget reviews and channel reporting. Use it loosely and teams pull apart; use it precisely and the numbers line up.

How is Cost Allocation used in practice?

Cost Allocation informs a decision -- most often a budget, a metric choice, or a comparison. The Calm example above shows the pattern.

Where do teams slip up on Cost Allocation?

Chasing Cost Allocation as a goal and benchmarking it raw. Both bury the real trade-off underneath.

What should I read next on Cost Allocation?

Browse the related terms below, then dig into marketing mix modeling, plus incrementality testing.

How is Cost Allocation defined?: Distributing indirect costs In short, fix that meaning before any tactic is debated.
What makes Cost Allocation worth knowing?: Cost Allocation shows up in budget reviews and channel reporting. Use it loosely and teams pull apart; use it precisely and the numbers line up.
How is Cost Allocation used in practice?: Cost Allocation informs a decision -- most often a budget, a metric choice, or a comparison. The Calm example above shows the pattern.