In any business organization, there are two types of sub-units or teams.
- Profit Centers
- Cost Centers
Profit Center is the team/department which gets the company money and thereby profits. They bring in the dough/bacon. One of the common example of a profit center is the sales department. Unless you have sales, you wouldn’t have customers and thereby no money.
Everything other than a profit center is a Cost center. Any team or department of a company to which various types of direct and indirect costs are charged are cost centers. It could be the Production or service departments in a factory, operations team, IT department, etc.