A single-service firm is a firm that provides only one service to customers. A multiple-service firm is a firm that provides several services to customers.
In a single-service firm there are no shared or common costs, and no need to attribute costs between services in order to calculate prices. As Figure 1 shows, the service’s stand-alone cost is equal to the total cost of the firm.
Cost and price calculations are considerably more complex for a multiple-service firm. Some of the firm’s costs will be shared by groups of services, or common to all services provided by the firm. For a multiple-service firm, total cost is the aggregation of the TSLRICs of the individual services, the costs shared by various combinations of services and the costs that are common to all services (see Figure 1). Shared and common costs cannot be directly attributed to individual services, but must still be somehow recovered through prices.
Figure 1: Cost Structure of a Single- Versus a Multiple-Service Firm
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