What Is Revenue Centre?

Revenue centres occupy a middle ground between cost centres and profit centres. The manager controls revenue generation activities but typically has limited control over the cost structure of their team. Performance is measured primarily on revenue attainment — hitting quota, winning new accounts, growing existing accounts.

The sales function is the classic revenue centre. Sales managers are given revenue targets and measured on attainment. While they manage their team's direct costs to some extent, major cost categories (salaries, technology, office space) are typically set by the company.

FP&A teams support revenue centres by building sales forecasts (pipeline analysis, conversion rates, run-rate analysis), tracking quota attainment, calculating sales efficiency metrics (revenue per sales rep, CAC by channel), and modelling compensation costs (base plus commission plus bonus).

A limitation of the revenue centre approach is that it can incentivise revenue at any cost. A sales team might win unprofitable deals or over-discount to hit targets. This is why some organisations transition sales from a revenue centre to a profit centre approach, where sales managers also own margin or contribution targets.

For UK businesses, revenue centre performance should be assessed alongside cash collection. A sales team that books revenue but leaves the finance team chasing payment is not fully effective. Linking revenue centre metrics to DSO (days sales outstanding) creates more balanced incentives.