IT Chargeback

What Does IT Chargeback Mean?

An IT chargeback is a process wherein departments associate costs with specific cost centers in order to more accurately track spending on IT. This is one of several options for accounting when it comes to determining what a company is spending money on.

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Techopedia Explains IT Chargeback

In an IT chargeback situation, instead of simply charging all IT costs to one central department, the company charges individual costs to the user groups or centers that most directly consume the goods or services that were purchased. This principle can make things clearer for administrators who have to manage costs and can also help to provide a clearer contrast for various options, such as outsourcing. With so many types of cloud and SaaS services proliferating across the business world, IT chargeback can be a useful way of ordering information and assessing value for cost.

IT chargeback is sometimes contrasted with other options for keeping track of costs, such as showback. In showback accounting, costs are presented in a decentralized way, without being actually cross-charged to the different accounts.

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Margaret Rouse
Technology Expert

Margaret is an award-winning technical writer and teacher known for her ability to explain complex technical subjects to a non-technical business audience. Over the past twenty years, her IT definitions have been published by Que in an encyclopedia of technology terms and cited in articles by the New York Times, Time Magazine, USA Today, ZDNet, PC Magazine, and Discovery Magazine. She joined Techopedia in 2011. Margaret's idea of a fun day is helping IT and business professionals learn to speak each other’s highly specialized languages.