Plain definition
A cost driver is an activity or factor that causes, or usefully explains, a cost to change. It may be units, orders, deliveries, setup hours, support tickets, or another operational measure.
Illustrative example
Monetary examples use Saudi riyals (SAR). The same principles apply in other currencies.
A courier’s delivery cost rises with stops, not merely sales value. Two customers each buy : one receives one pallet delivery, the other needs 40 small deliveries. Using revenue as the driver would hide the extra service burden of the second account.
Why it matters
The driver matters because it connects a cost to an action management can price, redesign, or control.
Practical consequence
Observe the operation, test candidate drivers against cost data, and keep the driver simple enough to collect reliably. Do not assume the most convenient measure is causal.