Profit center

A profit center is a section of a company treated as a separate business.

This means that the manager is accountable for driving the sales revenue generating activities which lead to cash inflows and at the same time controlling the cost-generating activities.

Profit center management is equivalent to running an independent business because a profit center business unit or department is treated as a distinct entity enabling revenues and expenses to be determined and its profitability to be measured.

Peter Drucker originally coined the term profit center around 1945.

He later recanted, calling it "One of the biggest mistakes I have made".