Finance Tools
Production Cost Increase Impact Calculator
Estimate how a production cost increase affects unit cost, unit margin, and annual profit based on your current unit economics and annual volume.
Estimate how a production cost increase affects unit cost, unit margin, and annual profit. Includes a simple price pass-through estimate.
Average realized selling price per unit.
Total cost per unit (materials + labor + overhead).
Units produced/sold per year.
Applies to the unit cost baseline.
Unit cost & margin
Unit cost: $18.00 → $19.08
Unit margin: $7.00 → $5.92
Margin %: 28.00% → 23.68%
Margin change: -$1.08
Annual profit impact
Annual profit: $560,000 → $473,600
Profit change: -$86,400
Annual profit ≈ unit margin × annual volume.
Price pass-through (simple)
Required selling price to keep original unit margin: $26.08
Required price increase: $1.08 (4.32%)
Assumes volume stays constant.
Tip: This tool assumes volume stays constant. Combine with elasticity assumptions if you expect demand changes.
How it works
- New unit cost = current unit cost × (1 + cost increase%).
- Unit margin = selling price − unit cost.
- Annual profit ≈ unit margin × annual volume.
- Pass-through shows the selling price needed to keep the original unit margin.
FAQ
Is this only for manufacturing?
No. Any business with per-unit economics can use it (food, retail bundles, services packaged per unit).
What if volume changes after a price increase?
This tool assumes constant volume. Use a demand model tool for elasticity scenarios.
How to use this production cost increase impact calculator
- Enter selling price per unit, current unit cost, and annual volume.
- Enter expected production cost increase percentage.
- Review new unit cost, new unit margin, and annual profit impact.
- See the required price increase to keep your original unit margin.
Example
A product sells for $25/unit, costs $18/unit, and volume is 80,000 units/year. Production costs rise by 6%.
- New unit cost = 18 × 1.06 = 19.08
- Unit margin changes from 25 − 18 = 7.00 to 25 − 19.08 = 5.92
- Annual profit impact ≈ margin change × 80,000
- Calculator estimates price needed to maintain the original margin
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