What’s Your True Cost to Serve? (And Why You Should Find Out)  

You know that customer who orders $10,000 worth of product every month? They might be losing you money.

Sounds crazy, but freight and logistics eat profit margins for breakfast. Most companies track product costs down to the penny, then completely ignore what happens after the sale. The rush shipments. The special handling. The three delivery attempts that failed because nobody was there to receive them.

It’s no wonder why U.S. companies spent $2.6 trillion on logistics last year: most have no idea which customers are worth keeping.

However, your cost to serve, what you actually spend getting products to each customer, tells the full story. And that’s precisely why we built NTelligence: to expose these hidden costs. We track every expense between your dock and their door, so you finally see which customers make you money and which ones just make you busy.

The truth about your cost to serve might sting. But running your business without knowing it? That is a gut punch that hurts exponentially more.  

Why Cost to Serve Matters

Let’s get specific about how logistics costs kill profits. These three examples show exactly how companies lose money on “profitable” customers every single day.

When Shipping Destroys Profit

Picture a midsized electronics distributor in Ohio selling phone cases for $8 per pair. Decent product, healthy margin on paper. But what if they ship each order individually at $15 for parcel delivery and handling? Every single sale would cost them $7.

The math would be brutal. Customer taps “buy,” the company loses money. Over and over. They could fix it with a three-unit minimum order, spreading those shipping costs across more products. But imagine the damage — months of losses they’d never see coming because they only tracked product margins, not delivery costs.

We see this pattern constantly. Companies nail their product pricing, then watch freight costs devour their profits one shipment at a time. Our analytics catch these profit killers before they spread through your entire catalog.

High-Maintenance Customers Aren’t Always Profitable

Your biggest customer might be your biggest problem. They place orders twice a week instead of monthly. They need rush delivery for every other shipment. They want special packaging that takes your warehouse team three times longer to prepare.

Revenue looks great on paper. But those rushed orders trigger overtime pay. Expedited freight costs triple. Manual processing eats hours of labor. Studies show up to 40% of customers become unprofitable once you factor in true service costs.

Meanwhile, that smaller customer who orders full pallets once a month? They’re probably making you more money with zero drama. Our platform regularly identifies trends like this and can spot which customers actually contribute to your bottom line, not just your top line.

Hidden Costs in Specialized or Remote Deliveries

Consider a consumer packaged goods company that creates unique displays for every grocery customer. Custom requirements for each store. Special freezer storage for certain locations. LTL freight to remote stores that can’t take full trucks.

Without proper cost tracking, these expenses would spread across their entire product line and make everything look equally profitable. But the reality would be stark: some SKUs generate strong profits while others hemorrhage money. The company just wouldn’t know which is which.

Remote deliveries compound the problem. That customer in rural Montana might love your product. Yet, if reaching them costs twice your average delivery, you need to know that before quoting standard pricing. We track these location-based costs automatically, so you can adjust prices for profitable margins or walk away from business that doesn’t pencil out.

How to Calculate Cost to Serve: A Simple Framework

Calculating your true cost to serve doesn’t require a PhD in supply chain management. You just need to stop pretending freight costs don’t exist and start tracking what happens after someone buys your product. Consider following this five-step framework.

1. Pull Every Cost Out of Hiding: Your real costs are scattered across a dozen systems. Freight in your TMS. Labor in your WMS. Returns somewhere in Excel. Accessorial fees buried in carrier invoices. Gather them all. NTelligence does this grunt work for you, offers real‑time dashboards tailored to customer‑specific KPIs, and can track costs down to the hundredths of a penny.
2. Follow the Money Trail: Watch where cash disappears between your warehouse and your customer’s door. How much does picking that weird SKU really cost? What about repacking orders three times because customers keep changing their minds? 
3. Compare Your “Best” Customers: Your convenience store orders might cost $22 each, while club stores only run you $12. Same product, wildly different profits. You can’t fix what you don’t measure, and NT Logistics measures everything, so you stop treating all customers like they’re equally valuable when they’re clearly not.
4. Stop Flying Blind: Quit managing costs through your rearview mirror. NT’s dashboards show what’s happening right now and what’ll happen if you change things. A national retailer kept shipping loads under 1,000 pounds, basically paying to ship air. NTelligence revealed the pattern, helped them change customer order sizes, and cut their transportation costs significantly.
5. Never Stop Adjusting: Fuel prices jump. Customers get pickier. Your perfect system from last quarter starts hemorrhaging money. Check your cost to serve numbers monthly, not annually. Renegotiate with problem accounts. Set minimums that make sense. NT Logistics flags these issues automatically before they eat your entire margin.

Your Freight Data Is Trying to Tell You Something

Every unprofitable customer you keep, every money-losing SKU you ship, every inefficient route you run all leave clues in your freight data. You just have to look. 

Most companies treat logistics costs like weather: something that happens to them rather than something they control. But when you finally calculate your true cost to serve, the fog clears.  

At NT Logistics, we see it all the time, because too many companies care more about moving boxes than solving business problems. And that’s why we built NTelligence: to expose what’s really happening between your dock and your customer’s door and answer the questions you should have been asking all along. Which customers actually make you money? Which routes burn cash? What would happen if you changed your minimum orders? 

Stop wondering and start knowing where your money goes and why.

Contact NT Logistics and request a free assessment. We’ll show you exactly where your money goes and how to keep more of it.