Sales and Service Accounts

In some cases, it may be appropriate for a department/center/institute to provide goods or services for a fee to the external community.  A department/center/institute may engage in direct sales of goods and services when:

  • the production of those goods or services is consistent with the normal activities of the department/center/institute;
  • substantially supports the teaching, research, or outreach mission of the University; and,
  • the activity does not unfairly compete with the private sector.

Direct sales of goods and services means an exchange of tangible or intangible property or services by the University with external customers for monetary consideration. The following factors will be considered and weighed in determining whether a direct sale of goods or services will be authorized:

  • The goods or services represent the transfer of knowledge or expertize from the University to the public.
  • The goods or services support and extend the University’s teaching, research, or outreach mission.
  • The prices charged for the goods or services takes into account all direct and indirect costs of providing the goods or services as well as the competitive price of such items in the public market.
  • The goods or services are not commonly available or otherwise easily accessible in the public market.
  • The provisions of goods or services represents an opportunity to utilize existing capacity or under-performing assets in order to reduce the University's internal costs of providing the goods or services.

To account for sales and service activities, a unique index code must be established in the University accounting system (Banner).  Business Services reviews and approves all index code requests.  To request a new index, complete the Index Code Request Form.  A brief narrative of the proposed activity and approval by the chair/dean/director is required.  To ensure the form is completed properly and the index code is established in a timely manner, review the instructions provided by Business Services. 


The price charged for goods and services to external customers must include all direct and indirect costs of providing the goods and services, as well as the competitive pricing of such items in the public market. A best practice for pricing should always at minimum recover direct costs, and whenever possible recover overhead and profit to the extent the market allows. External sales activities generally should be self-sustaining.

However, in situations where facilities would otherwise sit idle, incremental revenue may be desirable even if allowable indirect expenses are not fully recovered. Many University facilities carry fixed overhead costs that will be incurred regardless of how a facility might be used with an external customer base. In these situations, units are allowed to conduct external sales to help partially cover indirect costs that would otherwise be paid by the University.

Distinguishing Sales & Service from Sponsored Activity

The following distinctions are illustrative only but may be helpful in determining appropriate administration of a sales and service activity:

Sales & Service

  1. Activities generally do not require any intellectual interpretation or scholarly expertise, nor principal investigator oversight and involvement
  2. Sale of products or services (e.g., printing/photocopy, laboratory analysis) that could be commercially purchased; price determined by established fixed-fee schedules; data belongs to client
  3. Indemnification/hold harmless language is never included
  4. Activity typically originates when Client requests services
  5. Client generally provides samples (or content/material)
  6. Activities generate net income, often from a per unit sale
  7. Never accomplished via cost-reimbursable award mechanism
  8. Reporting requirements (e.g., financial, time & effort, etc.) or federal assurances never required
  9. Activity never cites a CFDA number, cost match, F&A, or FAR clauses
  10. Never requires institutional authorized official signature

Sponsored Programs

  1. Activities require specific intellectual interpretation or scholarly expertise, and principal investigator oversight and involvement 
  2. Provide specific deliverables per sponsor terms and conditions 
  3. Indemnification/hold harmless language may be included
  4. Activity usually originates when a proposal is submitted to sponsor 
  5. Researcher may collect samples (or provide content/material)
  6. Activities typically do not generate net income 
  7. Accomplished via specified award mechanism (e.g., fixed price or cost-reimbursable agreements) 
  8. Reporting required (e.g., financial, time & effort, etc.)
  9. May involve cost match or F&A
  10. Collaborator relationship exists (e.g., publication)

This determination checklist is a helpful tool to help identify whether an activity is more appropriate to be administered via Sales & Service or Sponsored Program.  

If equipment originally purchased with federal grant funds are involved in generating any Sales & Service revenue, the Department (Center, Institute, etc.) is responsible to ensure that use of equipment is compliant with Uniform Guidance 2 CFR 200.313 (or OMB A-110 Uniform Administrative Requirements for Grants and Agreements With Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations, with particular attention to Section C Equipment).

For further information, contact your accounting liaison in Business Services or ORSP.