Cost Per Unit Calculator
Answers the Question
How much does each of these cost?
Calculator for Cost Per Unit
What Is the Cost Per Unit?
A measure of the cost for each unit sold. Fixed costs are spread across all units, thus, for many offerings, the greater the number of units, the lower the average cost.
Why Is it Important?
- Knowing the average cost per unit will inform manufacturers about the prices that must be earned to achieve profitability.
- As a general rule, the lower the average cost can be driven down, the stronger a business case can be made for moving forward.
Formula(s) to Calculate Cost Per Unit
- COST PER UNIT = TOTAL COST / NUMBER OF UNITS
- Assuming that costs per unit are stable. It is often the case, whether one is a manufacturer or a buyer, that marginal costs decrease with volume. That is to say, the more items that are involved, the lower the per-unit price.
- Not considering opportunity costs when making decisions based upon per-unit costs.
- Assuming that all units will be sold or purchased.