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Cost Benchmarking Tool
Compare your costs with comparable businesses, per unit of sales or output, see which are out of line and what each gap is worth, and mark the gaps you keep on purpose.
This tool also runs as a stage in a playbook, which takes you through several tools in order:
- Reduce business costs Stage 2 of 4: which costs are out of line with others? Start at stage 1
Not following the playbook?
No budget or standard costs to compare against? The playbook can start here: list the cost areas below, with your figures and the benchmark.
Compare like with like
Compare cost per unit of output or as a share of sales, not total spending, and with businesses of similar size and type.
The comparison
The same word can cover different costs: freight in and out, or overhead with or without IT.
The cost areas
- Your figure: an amount for the period, or a share of sales with a % sign, such as 4.1%.
- The benchmark: the median of comparable businesses, as a share of sales or per unit.
- Name an area for what you can compare: an overtime overrun from rework is benchmarked as scrap and rework.
Your figures never leave your browser
The cost areas, the source and your reasons stay on your computer and in your progress file. To write the diagnosis, only the figures and your answers are sent to our server, by place in your list. How it works
Read the gaps
Not every gap is waste. A cost that is high because of a choice customers pay for, such as faster delivery, is a strength: mark it, and it stays out of the cuts.
In line, or below
Your costs against the benchmark
Every cost area
Within 10% of the benchmark is in line; 10% to 25% above is a small gap; more than 25% above is a large gap.
Save your progress
Download your progress file to continue from this point any time, on any computer: choose it under "Coming back?" at the start of the tool. Each new file includes everything so far, including the earlier stages when they are connected, so keep the latest one. Your work stays in this browser only until you close it.
Not saved yet.
Take your results with you
A PDF of your costs against the benchmark, the gaps and what each is worth, and the diagnosis.
About the tool
Why it exists
See which costs are high by any standard, not only against your own plan
Your own budget only tells you where you overspent against yourself. Benchmarking compares your costs with a reference point outside, to show which are high by any standard, and what matching the benchmark would be worth.
This tool works on its own, and as stage 2 of our playbook for reducing business costs, where it picks up the cost lines from the variance analysis of stage 1. For the method, see our guide to benchmarking.
The method
How the tool works
Like with like. Each cost is compared as a share of sales or per unit of output, so businesses of different size can be compared. Your amounts are divided by your sales or units; a figure with a % sign is used as it is.
Four types, by distance. Internal (one plant against another), competitive (direct competitors, often through industry surveys), functional (the same function in another industry) and generic (whoever does a process best). For costs, competitive figures are usually the fairest start.
Bands. Within 10% of the benchmark is in line; 10% to 25% above is a small gap; more than 25% above is a large gap. A gap's worth is the difference at the benchmark, over the period.
Deliberate choices. A cost that is high because customers pay for what it buys stays out of the cuts, with the reason written down. A wrong benchmark is worse than none, so the tool asks where the figures come from and whether they count the same costs as yours.
What leaves your computer. The cost areas, the source and your reasons stay in your browser and your progress file. To write the diagnosis, the page sends our server only the figures and your answers, by place in your list, and the server keeps nothing.