Cost Per Unit Calculator
Work out what each product, item or unit actually costs your business.
Enter batch costs, quantity produced and expected wastage to calculate cost per saleable unit. Optionally add per-unit packaging or fulfilment and a target margin to estimate a selling price.
Suits product makers, manufacturers, food businesses and ecommerce sellers.
Batch & Unit Inputs
Total cost of raw materials or stock purchased for the batch.
Wages or contractor time directly spent producing this batch.
Freight in, consumables, machine time or other costs tied to the batch.
Total units made or purchased in this batch.
Units expected to be damaged, spoiled or unsellable (max 95%).
Boxes, labels, satchels, inserts or pick-and-pack costs per unit sold.
Used to estimate a calculated selling price from your total cost per unit.
Based on $1,500.00 of batch costs spread across 95 expected saleable units, plus $2.00 of packaging and fulfilment per unit.
Wastage Raises the Cost of Every Saleable Unit
Wasted units still consume materials and labour, but they produce no revenue. The batch cost is recovered across fewer items.
How Wastage Changes Your Unit Cost
Based on your current batch cost and units produced.
| Wastage | Saleable Units | Cost Per Unit | Change |
|---|---|---|---|
| 0% | 100 | $17.00 | −$0.79 |
| 2% | 98 | $17.31 | −$0.48 |
| 5% | 95 | $17.79 | — |
| 10% | 90 | $18.67 | +$0.88 |
| 15% | 85 | $19.65 | +$1.86 |
How Production Volume Changes Cost Per Unit
Assumes the same batch cost and wastage rate at each volume.
| Units Produced | Saleable Units | Cost Per Unit |
|---|---|---|
| 50 | 47.5 | $33.58 |
| 100 | 95 | $17.79 |
| 250 | 237.5 | $8.32 |
| 500 | 475 | $5.16 |
Caveat: this comparison holds batch costs constant. In practice materials, labour and freight usually change with volume, so re-enter real costs for each production run.
From Unit Cost to Selling Price
Your current figures carried through to a customer price.
| Total cost per unit | $17.79 |
|---|---|
| Target gross margin | 40.00% |
| Calculated selling price (ex GST) | $29.65 |
| GST (10%) | $2.96 |
| Customer price (incl GST) | $32.61 |
| Gross profit per unit | $11.86 |
| Equivalent markup | 66.67% |
Explore price scenarios in more depth with the Selling Price Calculator.
Don't Confuse Margin With Markup
Both start from cost, but they divide by different numbers. On a $20 unit cost:
$20 × 1.40 = $28.00 selling price, which is a 28.57% gross margin.
$20 ÷ 0.60 = $33.33 selling price, a materially higher price for the same cost.
Convert between the two with the Markup Calculator.
Worked Example: A 200-Unit Production Run
A small Australian maker produces 200 units in a single batch and expects 5% of them to be unsellable.
$21.74 ex GST at a 35% target margin
$14.13 ÷ 0.65 = $21.74 excluding GST. Where GST applies, the customer price becomes $23.91 including GST.
What Costs Should I Include?
Typical direct costs by business type.
- Wholesale or landed stock cost
- Inbound freight and duties
- Labelling and relabelling
- Quality checks
- Raw materials
- Production labour
- Machine time and consumables
- Scrap and rework
- Ingredients
- Kitchen and prep labour
- Spoilage and trim waste
- Containers and lids
- Unit purchase cost
- Pick, pack and satchels
- Inbound freight to 3PL
- Per-order inserts
Should Every Business Expense Go Into Unit Cost?
Direct costs rise and fall with the units you make or sell, so they belong in cost per unit. Broader overheads such as rent, insurance, software and administration wages generally do not change with a single unit, and forcing them into unit cost can distort pricing decisions.
A common approach is to keep unit cost limited to direct costs, then confirm that total gross profit covers overheads across the period. Test that with the Break-Even Calculator.
Should GST Be Included in Cost Per Unit?
Where a business is registered for GST and can claim credits on its purchases, costing is generally performed on a consistent GST-exclusive basis so that cost, margin and price all sit on the same footing. Mixing GST-inclusive costs with GST-exclusive prices can overstate unit cost.
GST treatment depends on your circumstances and registration status, so confirm the correct approach for your business. Add or remove 10% GST on any figure with the GST Calculator.
Related Australian Business Calculators
Continue from unit cost through to pricing, margin and volume.
Selling Price Calculator
Turn unit cost and target margin into a price.
Margin Calculator
Check the margin an existing price delivers.
Markup Calculator
Build a price from cost and markup percentage.
Break-Even Calculator
See the volume required to cover overheads.
Gross Profit Calculator
Measure revenue left after direct costs.
GST Calculator
Add or remove 10% Australian GST.
Frequently Asked Questions
Common questions about calculating cost per unit.
What is cost per unit?
Cost per unit is the total cost of producing or acquiring a batch divided by the number of units you can actually sell from that batch. It answers what one saleable item costs your business before profit is added.
How do I calculate cost per unit?
Add materials, direct labour and other batch costs, then divide by the saleable units produced. Add any per-unit packaging or fulfilment cost to reach the total cost per unit.
Should I include labour in cost per unit?
Include labour that is directly tied to producing or preparing the units, such as assembly, production or kitchen time. General administration wages are usually treated as overhead instead.
Should I include packaging?
Include packaging and fulfilment when they are incurred for each unit sold, such as boxes, labels, inserts and satchels. These costs change with volume and belong in the per-unit figure.
How do I include wastage?
Enter expected wastage as a percentage of units produced. The calculator reduces the saleable unit count, so the same batch cost is spread over fewer sellable items.
Why does wastage increase unit cost?
Wasted units still consume materials, labour and time, but produce no revenue. The full batch cost is therefore recovered across a smaller number of saleable units, raising the cost of each one.
Should I include overheads in cost per unit?
Some businesses allocate a share of overheads to each batch for pricing purposes. Others keep unit cost limited to direct costs and cover overheads through break-even analysis. Use whichever approach you apply consistently.
What is the difference between cost per unit and selling price?
Cost per unit is what the item costs you. Selling price is what you charge a customer, which must cover unit cost plus your target gross margin and, ultimately, overheads.
Can I calculate a selling price from unit cost?
Yes. Divide the total cost per unit by one minus your target gross margin expressed as a decimal. A $14.13 unit cost at a 35% target margin gives a calculated selling price of $21.74 excluding GST.
Is cost per unit the same as COGS?
They are related but not identical. Cost of goods sold is the total direct cost of the units actually sold in a period, while cost per unit is the direct cost attributable to a single saleable item.
Know what each unit costs. Now decide what to charge.
Carry your unit cost through to a price and check the margin it delivers.
General information only. Results are estimates for general business information based on the figures entered and are not accounting, financial or tax advice.