In administration, cost management is the process by which companies use cost counts to report or control the different costs of their business.

The term “cost management” is widely used in the business world today. Unfortunately there is no uniform definition. The term is used to describe the activities of managers in short- and long-term planning and control decisions that increase value for customers and decrease the price of products and services. For example, managers make decisions considering the amount and type of material used, changes in plant processes, and changes in product design. The information from the account systems helps the administrator make these decisions, but such information and these systems are not in themselves cost management.

Cost management has a broad focus. It includes the continuous reduction of costs, without being confined only to that. Cost planning and control is normally inextricably linked with revenue and profit planning. For example, to improve revenues and profits, managers often incur additional expenses on advertising and product modifications.

Cost management is not practiced in isolation. It is an integral part of the general management of strategies and their implementation. An example is programs that improve customer satisfaction and quality.