The countable activity that causes a cost to rise, such as orders, order lines, deliveries or support tickets.
A cost driver is the activity whose volume explains why a cost goes up or down. Picking cost is driven by order lines, delivery cost by drops, support cost by tickets. In activity-based costing, each overhead pool is divided by its driver to get a rate, and that rate is what charges the cost to customers and products.
Driver rate = cost of the activity / total volume of its driver over the same period. Cost charged = driver rate x the volume each customer or product used.
Warehouse picking costs $90,000 a quarter and handles 30,000 order lines, a rate of $3 per line. A customer with 2,500 lines in the quarter is charged $7,500 of picking.
A driver that correlates with the cost but does not cause it, such as revenue, which hides small, frequent orders. Test it: the driver volume should move when the cost moves. The full guide is activity-based costing.