The term primary costs comes from accounting and belongs to cost accounting and divides costs into cost categories. A distinction is made here between the origin of the goods for which the costs were incurred.
Definition / explanation
Primary costs are the costs of goods that a company does not produce itself, but purchases externally. In addition to products, these can also be services. In contrast to this are the Secondary costs (Products / services produced or provided within the company).
Primary costs are therefore costs that arise for production factors of all kinds, which are procured externally. Primary costs are allocated to the exact cost center that caused the costs.
Types of primary costs
- Labor costs or personnel costs
- Costs for office supplies, production materials
- External service costs
- Rental costs for buildings
- Risk costs