Cost transparency for testing and diagnostic laboratories

How integrated cost pricing calculation transforms your test portfolio and profitability

As a consultant for laboratory excellence, I regularly work with laboratory organisations that operate in an environment characterised by regulation, volatility and complexity. What I encounter time and again is that portfolio decisions are too often made based on gut feeling. The reasons for this are more profound and are usually due to insufficient data. This is exactly where my work comes in: creating genuine transparency about full costs down to the parameter level, objectifying decisions and making profit contributions visible. Our clients rightly ask themselves strategic questions such as: ‘Which test parameters are actually profitable?’, ‘Which tests should I carry out in-house or, if necessary, subcontract?’ or ‘Where is it worthwhile to consolidate tests and resources at different locations?’.

In most cases, our projects quickly lead to significant improvements in results and controllability, provided that all components of full cost controlling in the laboratory environment are considered in an integrated manner. In addition to recording actual consumption in the laboratory, this also includes incorporating existing reporting structures and agreeing on a uniform cost scheme. Under these conditions, laboratory organisations achieve measurable results in their P&L rather than theoretical models.

Why laboratory organisations lack cost transparency

Regardless of the laboratory segment, from food and environmental testing to medical diagnostics, for example, we observe similar patterns:

• High portfolio complexity: Hundreds of parameters, different measurement methods, variable processes and small volumes lead to a lack of clarity regarding direct and indirect costs. This obscures the actual profitability of individual tests.
• Heterogeneous P&L logic: Locations record overhead costs, allocations and depreciation differently. This creates distorted profitability pictures that make decisions difficult.
• Estimates instead of actual data: Working hours, measurement cycles, reagent consumption or equipment use are often assumed rather than measured. This leads to inaccuracies that add up.
• No integrated cost reporting: LIMS and ERP are often in place, but there is no bridge to a robust BI system that brings together real sample numbers, actual consumption and full costs down to the parameter level.

I feel the consequences of this in every management meeting: without reliable cost transparency, decisions about outsourcing, consolidation, pricing strategies or investments remain speculative. Opportunities for efficiency and growth remain untapped.

Practical example: A laboratory chain optimises its portfolio through genuine cost transparency

At adesso Life Sciences, we established a parameter-specific full cost analysis in a European network of food and environmental laboratories. The company operated several locations in Germany, Austria and Switzerland, as well as in Eastern and Southern Europe. It was DAkkS-accredited and served both industrial and public sector clients. Over 600 parameters were offered at individual locations – with a correspondingly broad test portfolio and a lack of cost transparency. LIMS and ERP were in place, but there was no cross-location BI cost reporting.

From a management perspective, the previous calculation method was insufficient for portfolio decisions: it was inconsistent across locations, partly flat-rate and not based on actual values. The relevant questions were obvious: Which parameters are profitable? Is it worthwhile to concentrate on certain locations? Where does outsourcing make economic sense?

Our approach: In-depth laboratory shadowing was carried out, actual consumption was recorded and a uniform calculation scheme was introduced. This created transparency for every test, every test group and every laboratory line, consistent across all locations.

The results at a glance:

• precise actual costs per parameter instead of blanket assumptions,
• clearly quantifiable contribution margins per location,
• well-founded make-or-buy decisions,
• a consistent, optimised test portfolio and
• a significant, measurable increase in EBITDA.

What really helps customers

When I talk about customer benefits, I don't mean ‘dashboards for the sake of dashboards’, but rather controllability and impact on results. Based on project experience, these effects are particularly noticeable:

• Actual costs per parameter, realistic and reliable: No estimation logic, but measured working and measurement times, real consumption and clean allocations.
• Harmonised calculation logic across all locations: Finally, comparability and consistent KPIs, regardless of location.
• Seamless integration into existing reporting: LIMS/ERP remain the backbone; BI becomes the decisive view of profitability.
• Objective decisions: Portfolio, prices, investments – based on facts instead of gut feeling.
• Direct P&L impact: Improved contribution margins, clear fixed cost allocation, reliable pricing strategies and quotation calculations (including economies of scale).
• Quick benefits: Ready-to-use Power BI reporting ensures rapid visibility and acceptance.

This provides laboratory organisations with valuable short-term analyses to optimise their test portfolio and identify unprofitable parameters. In addition, clear decisions can be made about internal retention of test parameters, consolidation at locations or outsourcing. The positive EBITDA effect is usually felt almost immediately.

Why this approach is tailored to the specific characteristics of the laboratory industry

For successful implementation, it is crucial to record both operational consumption in the form of laboratory shadowing and to cover the controlling perspective. Ideally, this approach takes into account the specific characteristics of testing and diagnostic laboratories, such as those in an accredited and regulated environment (e.g. DAkkS, ISO 17025, GxP). It is important that solutions are not ‘off the shelf’ but are integrated into existing LIMS/ERP landscapes. For us, this means being technology-agnostic, with a clear focus on data integrity, data warehousing, BI and consistent cost centre logic. This ensures that the model not only remains practical, but also provides management with a continuous basis for decision-making in everyday business.

The adesso approach to cost pricing calculation

The approach is usually implemented in five phases, which are individually adapted to the customer's set-up.

Phase 1 – Database & harmonisation

• Consolidation of all relevant data from the existing software landscape (LIMS, ERP, order entry/registration, laboratory middleware) and data integrity,
• the establishment of a data warehouse and
• the definition of a uniform data and allocation logic.

Phase 2 – Shadowing in the laboratory

adesso teams accompany laboratory processes on site to record real values:

• actual working hours,
• effective measurement times,
• reagents and consumables, and
• equipment usage.

Phase 3 – Cost modelling

A uniform calculation scheme is developed across all locations based on actual data. This includes:

• Equipment and infrastructure costs,
• Location and group allocations,
• Depreciation logic,
• Employee costs per parameter, and
• Costs per measurement cycle.

Phase 4 – Rollout & Reporting

• Rolling out the scheme across all locations,
• automated KPI calculation and
• setting up Power BI reporting with: parameter contribution margins,
• profitability traffic lights,
• location comparisons and
• portfolio heat maps.

Phase 5 – Management control

A daily updated portfolio analysis, presented as a BI dashboard, lays the foundation for strategic decisions such as:

• Internal vs. external execution (make-or-buy) of tests,
• Consolidation of tests,
• Price adjustments,
• Capacity and utilisation optimisations, and
• Scaling decisions.

My conclusion from practical experience

The decisive factor is not ‘whether’ but ‘how’ to achieve cost transparency. When actual data is collected accurately, allocations are modelled consistently and reporting structures are integrated in a streamlined manner, a new level of control is achieved: cost centres become tangible, contribution margins become traceable and portfolios can be actively shaped. All in all, this results in a measurable EBITDA contribution – and a sustainable one at that.

If you face similar challenges, it is worth taking the first step towards reliable data and a clear model. This is exactly where we start our collaboration: with a focus on feasibility, acceptance in everyday laboratory work and impact on results.

adesso Life Sciences Laboratory Excellence at a glance

• In-depth understanding of laboratories, processes and IT
• Many years of project experience in testing, diagnostics, pharmaceutical and R&D laboratories
• Focus on implementation and real business impact
• Extensive partner network of laboratory software providers (order entry, LIMS, LIS, ELN)
• Innovative AI solutions for efficiency gains in laboratories
• Independent consulting and technology-agnostic