Today, the management of service quality poses a ma-jor challenge for many service providers and their business ustomers. The authors argue that the trade-off between ser-vice cost and benefit incurred by both parties is not suf-ficiently considered when service quality is stipulated.Up to now, neither in practice nor in academia a commonly accepted engineering approach exists to deter-mine business-relevant performance metrics and associ-ated cost-efficient target values to precisely identify ef-ficient service quality. It can be expected, though, thatsuch a systematically developed and economically well-founded Service Level Engineering approach — basedon the individual economic conditions of customer andprovider — can enhance the value generation in servicesystems formed by both these parties. In this work the authors lay the foundation for the field of Service Level Engi-neering discussing its constitutional concepts and ele-ments. After developing a generic framework for dif-ferent Service Level Engineering scenarios, we analyzeone scenario — the system view — in detail as a quanti-tative optimization problem: In particular, they aim at the derivation of cost-efficient target values given business-relevant performance-metrics.