As a phrase (cost of service), it means what it appears to mean: the cost of providing a service. In the energy industry and other fields. It can also be used as an adjective (cost-of-service or simply COS) to denote rate structures, analysis and expenses among other things.

Cost-of-service pricing is the setting of a price for a service based on the costs incurred in providing it. COS pricing can be applied to an individual customer based on the costs of serving that customer (usually this is done only with large-scale customers or customers who are costly or troublesome to serve), or as an average cost of service for a group of similar customers.

Cost-of-service pricing is a common method for setting prices for some types of publicly-funded services. It is sometimes applied to rate structures for privately-held utilities in deregulated markets to insure that the provision of an essential service in a difficult or expensive market isn't limited to a select few who can afford it.

In the energy industry, cost-of-service and value-of-service rates can be mixed for the same service. For example, an energy customer may pay cost-of-service rates for the actual energy they consume, but they may pay value-of-service rates for ancillary services such as backup and maintenance of the distribution system required to serve them.

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