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Marginal Cost Calculator

Answers the Question

How much would it cost to produce one more item?

Calculator for Marginal Cost








What Is the Marginal Cost?

Many businesses do whatever they can to minimize their costs of production.

The marginal cost is the measure of how much a company must pay to create exactly one additional good, beyond those already built.

Sometimes each unit of good costs the same amount to produce; this is often true in the service world.

If I were to hire an editor, it would take him ten times as much effort to edit ten pages as it would for him to edit one. In his case, his costs increase at the same rate as the quantity of work he takes on.

The economics of most goods, however, work a little differently. In the case of the editor, his costs are all variable. For most businesses, there are fixed costs too.

At the extreme, a vendor might have completely fixed costs. For instance, an author may spend a significant amount of money to pay a writer to create an ebook. Once that ebook has been written, however, it costs almost nothing to produce an additional copy for sale.

The more a business spends on fixed costs like factories, research, and analysis, the lower the additional cost to produce another unit.

Most goods incur a mixture of variable and fixed costs of production. The greater the percentage of fixed costs, the lower the marginal cost of production.

Why Is it Important?

Formula(s) to Calculate Marginal Cost

Common Mistakes

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