Cost Recovery

Cost recovery involves using your organization’s historical data to determine current and projected:

• cost recovery for every service provided
• actual expense for every service provided; and
• actual fees and projected fees for every service provided.

This work is most easily accomplished with purpose-built software, such as CivicPlus Cost Recovery.

“Under cost recovery” essentially means that you are subsidizing the service or running at loss. For example, if the expense of a service you offer costs $100.00 per person and your fee is $50.00, then you are at a 50% cost recovery goal, or under 100%.

Cost recovery software, such as CivicPlus Cost Recovery, provides automated workflows and purpose-built tools for pricing updates, revenue tracking, and financial reporting. It’s designed to help optimize revenue, streamline processes, and build sustainable, affordable programs. Cost recovery software empowers your department to make data-driven decisions, reduce administrative overhead, and create transparent pricing strategies to foster community trust while maintaining consistent and consistent revenue to drive long-term sustainability.

The cost recovery method, as used by CivicPlus, involves understanding the “full cost” of offering a service and then applying, if warranted, a cost recovery goal. This encompasses direct expenses (including facility expenses) as well as indirect expenses (including administrative expenses).

The cost recovery rate can mean different things. One way of thinking about cost recovery rates is to think about your cost recovery goals:

• Community goals: Does this service or program connect to an initiative the community is focusing on?
• Subsidizing vs. Revenue goals: Where does the program fall on the spectrum between subsidizing services and capturing revenue from them?

For example, imagine that serving underprivileged youth and families is a critical community priority, specifically including offering a youth swim class. A revenue-based goal might tell the agency to price the youth swim class at 120% cost recovery rate. However, the community may choose to price the swim class at the cost of service or below, therefore subsidizing the class.

CivicPlus can help local governments weigh these different factors and determine—in real-time—how they can most effectively and efficiently allocate financial resources and set the cost recovery rates that match their cost recovery goals.