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Profit centers are departments, teams and other organizational units that are responsible for profit & loss. Alternatively, profit center also has a watered-down definition -- an organizational unit that is responsible for revenue. The following are common examples of profit centers.
Business UnitsA business unit is a team that is responsible for profit & loss (P&L) for some aspect of a business such as a brand, product line or geographical region.Retail StoresRetail locations are evaluated on a profit and loss basis and are profit centers.Service LocationsService locations such as a hotel.ChannelsIn some cases, a marketing channel such as ecommerce may be responsible for profit & loss.
BrandsIt is common for firms to be structured into a series of separate brands that are each responsible for profit & loss.Sales RegionsSales offices responsible for profits across a region.Customer SegmentsDepartments that service a particular customer segment such as a wealth management team at a bank that is responsible for wealthy clients.Business DevelopmentTeams that are responsible for growing new products, services and brands.Sales OfficesIf you go by the weaker definition of a profit center, as a revenue generating team, a sales team is a profit center even in cases where they aren't fully responsible for profit & loss.OverviewAn organization can be structured into many profit centers in order to ensure that various brands, products, locations, customer segments and channels are being managed profitably.SummaryThe following are the common types of department that are viewed as profit centers.Next read: Cost Center
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