Revenue Center Model (RCM)

Our Revenue Center Model is developed by determining which schools or divisions of the university generate revenue; allocating to those divisions the appropriate amount of revenue; determining the direct and indirect costs that should be allocated to those revenue centers (all institutional expenses must be allocated to one or more revenue centers by a “step down method”); and determining the net income each revenue center generates for the university. The benefit of the revenue center analysis system is that it identifies the divisions or schools that generate cash for the institution and those that use it, showing the way to making thoughtful resource allocation decisions. The development of this model requires some effort on the part of the business office staff to conduct data gathering.