Definition
Cost-to-Serve
The total variable cost of delivering your product or service to one customer, including API costs, compute, and per-customer overhead.
Formula: Cost-to-Serve = (API Costs + Compute + Per-Customer Overhead) / Customer
Worked example
A customer using 500K tokens/month at $0.03/1K tokens has API cost of $15. Add $5 compute overhead = $20 cost-to-serve.
Related
- Cost Intelligence→ (how Bear Lumen applies this)
- Customer Margin
- Usage-Based Pricing
- Profit per Customer
- All definitions