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Cost Tree Analysis
Decompose the cost base by economic driver, benchmark each line and quantify what is actually recoverable.
Run a Cost Tree Analysis
Describe the engagement and what you need. We will turn it into a structured document.
Describe the business and its cost structure. Include the total if you know it.
What is the cost base we are decomposing? is required to enable Generate.
- Analysis (completed)
- Context (completed)
- Inputs
- Review
- Generate
- Result
- Export
What this tool does
A cost tree decomposes a cost base twice: first into categories, then into the individual lines that drive it. The discipline that makes it useful rather than decorative is that every leaf line names the variable which makes the cost move — volume, headcount, rate, usage or contract. That distinction decides whether a cost can actually be reduced, and it is exactly what an org-chart view of costs cannot tell you. The generator builds eight to fourteen lines with the amount and share of total internally consistent, a benchmark for each, and a specific savings lever with a realistic annual value. It closes with the savings initiatives ordered by value, the structural observations a flat cost list hides, and the changes that can start inside thirty days.
How to use it
- 1Give the total cost base if you know it. The line items and percentages are then built against a stated total rather than an assumed one.
- 2Describe the business and its cost structure — headcount, sites, and the largest lines you already suspect.
- 3Run it, then challenge the driver column first. If you disagree about what drives a line, the saving will not materialise.
- 4Treat any benchmark marked [to be validated] as an open action, and use the quick wins list to start while the rest is researched.
A worked example
What a real run looks like
Input — a mid-sized operator, not a generic prompt
120-person UK B2B services firm with a USD 28 million annual cost base. Largest lines are people, travel, cloud and subcontractor delivery.
What comes back
Ten to twelve cost lines across people, technology, premises, delivery and G&A, each with its amount, share of total, driver, benchmark and savings lever — with the shares summing to 100% against the stated total. Four to six savings initiatives ordered by value, each carrying the annual saving, effort, time to impact and a confidence level. Closes with structural insights such as which costs scale with the wrong variable, plus the changes startable inside thirty days.
Frequently asked questions
What is a cost tree?
A cost tree decomposes a total cost base into categories and then into the individual cost lines that drive it. Unlike an org-chart view, each line names the variable that makes the cost move — volume, headcount, rate, usage or contract — which is what makes a saving actionable.
How is a cost tree different from a cost-cutting list?
A cost-cutting list starts from where money is spent. A cost tree starts from what drives the spend, so it distinguishes a cost that scales with revenue from one that scales with headcount. That distinction decides whether a line can actually be reduced.
Are the benchmarks sourced?
Where a comparable benchmark is genuinely known it is stated with its basis. Where it is not, it is marked [to be validated] and the source that would settle it is named, rather than an industry average being presented as a sourced figure.
Is this cost tree generator free?
Yes. The ConsultantAI cost tree generator is free and requires no sign-up.
Need this on your own engagement?
The free tool covers the framework. A full ConsultantAI project turns it into a cited, board-ready deliverable built from your documents — market sizing, a financial model, or a complete deck, with every figure sourced.