Cost Calculator

Complete Guide: Cost Calculator

Use this guide to understand what drives your total cost, how to separate fixed vs variable expenses, and how to find the break-even point. Whether you run an e‑commerce shop, a local restaurant, or a SaaS product, knowing your cost structure helps you set prices, forecast profit, and decide where to cut or invest.

How to Use the Calculator

1. Choose your analysis period (monthly, quarterly, or annually).
2. Enter fixed costs like rent, salaried staff, insurance, utilities, and software.
3. Add variable costs per unit: materials, direct labor, packaging, shipping, and other per‑unit costs.
4. Include percent‑of‑price costs like card processing fees and sales commissions.
5. Set average selling price and units for the period, then review your total and per‑unit cost, margins, and break‑even units.

Fixed vs Variable Costs

Fixed costs are expenses that stay the same within your normal operating range (e.g., rent, most salaries, insurance, many software tools). Variable costs change with volume (e.g., materials, packaging, shipping, usage‑based software, card processing fees, commissions). Distinguishing the two clarifies your cost structure and helps you manage scalability.

Core Formulas

• Total variable cost = Variable cost per unit × Units
• Total cost = Fixed cost + Total variable cost
• Average cost per unit = Total cost ÷ Units
• Contribution per unit = Price − Variable cost per unit
• Break‑even units = Fixed cost ÷ (Price − Variable cost per unit)

Worked Example (E‑commerce)

Suppose you sell a $50 product. Your variable cost per unit is $25 (materials $15, labor $5, packaging $1.50, shipping $3.50) and processing fees are 2.9% of price. That adds $1.45 per unit to variable cost, for a total variable cost of $26.45. If you sell 1,000 units this month and fixed costs are $10,700, then:

• Total variable cost = $26.45 × 1,000 = $26,450
• Total cost = $10,700 + $26,450 = $37,150
• Average cost per unit = $37,150 ÷ 1,000 = $37.15
• Contribution per unit = $50 − $26.45 = $23.55
• Break‑even units = $10,700 ÷ $23.55 ≈ 455 units

Improving Your Cost Structure

• Negotiate inputs: Renegotiate vendor contracts, shipping rates, and payment processing tiers as volume grows.
• Automate where sensible: Reduce manual work per unit with tooling and SOPs.
• Bundle and re‑price: Pair high‑margin items with low‑margin ones to improve blended margins.
• Right‑size fixed costs: Delay hiring or sublease space if capacity is underused.
• Audit software: Remove redundant tools or switch to usage‑based plans that better fit.

Tip: Watch contribution margin closely—if price and unit cost move in opposite directions, break‑even can shift quickly. Revisit inputs monthly in seasonal businesses and whenever vendors change pricing.