Create a Great Cost Report: Three Ways to Price Your IT Environment

Make What’s Hidden in the IT Budget Concrete

A common challenge for organizations is that the business and IT requesters don’t understand how their activities and decisions drive costs for the IT department. This can include everything from support tickets, laptop orders, new licenses, firewalls, and VPNs to access to new services. Everything obviously has a cost, but for the requester, these expenses almost always end up in the generic “IT budget.”

This is partly due to the business lacking both insight into and understanding of IT’s cost structure. What does access to Microsoft Teams, Adobe Photoshop, or the payroll system actually cost? Another contributing factor is the lack of effective ways for IT to communicate and make tangible what is actually delivered to the business. As a result, both sides are left in the dark when it comes to the question:

How do we fairly allocate costs related to IT delivery?

Allocate Costs in a Cost Report

With this in mind, wouldn’t it make sense to try breaking down the fuzzy “IT budget” into more concrete cost items? This gives IT the opportunity to communicate costs more clearly, while giving the business better insight into how their usage contributes to those costs.

Let’s start by reviewing three different examples of what an IT cost report might look like. These reports can serve as a shared foundation for agreeing on how costs should be allocated—a first step toward greater transparency.

The following cost reports are based on three different ways of pricing IT. They vary in complexity and therefore also in how much time is required to compile them. Use these as guidance and as a first step toward better alignment between IT and the business.

Option 1: Simple, Fast, Efficient / Per User Account

Example Price List

Cost to allocate: $100,000 / year

Department A: 150 user accounts
Department B: 80 user accounts
Department C: 20 user accounts

Annual cost per account: 100,000 / 250 = $400

Example Cost Report

Recipient	Quantity	Total
Department A	150 × 400	$60,000
Department B	80 × 400	$32,000
Department C	20 × 400	$8,000

Benefits

• Easy to understand and quick to implement.
• Simple to adjust pricing annually.
• Useful for high-level budget indication.

But keep in mind…

• No insight into what actually drives costs.
• Requesters have little influence over costs other than disabling accounts.
• Allocation can be skewed if some departments have many users but low consumption.

Option 2: Balanced / Packaged

Example Price List

	Bronze	Silver	Gold
Base cost	$30	$80	$150
O365	E1	E3	E5
User account	1	1	1
Laptop/iPad	1	2	2
Antivirus	No	No	Yes
VPN	No	No	Yes

Example Cost Report

	Workplace
	Bronze	Silver	Gold	Total
Department A	100	50	2	$7,300
Department B	50	20	0	$3,100
Department C	5	0	1	$300

Benefits

• The business can influence costs by choosing tiers.
• Clear and easy-to-read reports.
• Data can be updated continuously.

But keep in mind…

• More detail requires more accurate and frequent updates.
• Decide how to handle “other” or shared costs.
• Clearly define what’s included in each package.

Option 3: Maximum Precision / Detailed

Example Price List

Items	Price
Licenses (O365)	$30 per license
Licenses (Antivirus)	$20 per license
Hardware (Laptops)	$50 per unit
WiFi (fixed cost)	$1,000
Monitoring (per service used)	$100 per service
Remote support (per laptop)	$5 per laptop
Support tickets	$3 per ticket
Print volume (B/W / Color)	$1 / $1 per B/W / color
External consulting hours	$100 per hour

Example Cost Report

Items	Department A	Department B	Department C
Licenses (O365)	100	15	0
Licenses (Antivirus)	50	25	10
Hardware (Laptops)	50	50	50
WiFi	1	1	1
Monitoring (per service used)	5	3	1
Remote support (per laptop)	50	50	50
Support tickets	30	90	10
Print volume (B/W / Color)	0 / 0	200 / 0	3,000 / 1,500
External consulting hours	0	10	30
Total	$8,340	$6,370	$10,080

Benefits

• High transparency and perceived fairness.
• Clear visibility into cost drivers.
• Strong foundation for optimization and cost savings.

But keep in mind…

• Requires high data quality and ongoing updates.
• More administration when many items or metrics are involved.
• Allocation keys must be carefully calibrated to feel fair.

In Closing

There is no single truth when it comes to IT pricing. Choose a model that feels fair and reflects the actual costs of IT delivery. The examples above provide three starting points. If you want to dive deeper, I recommend the guide Cost Reporting for IT, where you’ll find more tips on pricing and building reports for different stakeholders within the organization.

Good luck!