This study is based on a cost management system of Microlink Eesti SMM business line that is active in IT services industry. The objective of this research was to identify the areas of current cost management system needing improvement and to determine the best costing method that would solve the problem areas and most seamlessly could be integrated into current cost management system. The aim was not to develop the one and only costing system for an IT service company, but to find the most suitable supporting method or combination of methods that is sufficient to fulfill the criteria of the cost system and its users. Out of the several costing methods Activity Based Costing and Explicit Cost Dynamics fulfilled the criteria the most.