How do you calculate the cost of production per unit in e-commerce?
Asked 2 years ago
I need to calculate the average cost per unit to ensure that my product pricing strategy is adequate and still generates a profit. But I don't know the formula. Can you please share it with me?
Dallas Whitaker
Monday, March 21, 2022
The cost per unit should be calculated to set the price high enough to profit. There is a simple formula to evaluate the cost of production per unit. Mathematically, it can be represented as:
(Total fixed costs + Total variable costs) / Total units produced
Let's assume that the total (fixed + variable) cost is $2000. And the total units produced is 200. By putting it into the formula, we get:
2000 / 200 = 10
Interpretation of the result: We have $10 of the production cost per unit.
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