The maker's costing glossary
Unit Cost
The all-in cost to make one finished item.
Unit cost rolls up everything one finished item consumes: materials, labor, machine time, and a fair share of overhead. It's the number every price should start from — the true bottom of the barrel. Set a price below unit cost and you lose money on every sale, however busy you are.
Why it matters
Unit cost is where pricing has to begin. Margin, markup, wholesale, keystone — all of them are operations on top of unit cost. If that base number is wrong (usually because labor or overhead was left out), every price built on it is wrong too. Getting unit cost right is the highest-leverage thing a maker can do.
How to calculate it
Add the material cost (from the BOM), the labor cost (hours × your rate), the machine cost (time × machine rate), and an overhead allowance. The sum is the all-in cost of one unit.
Unit cost = materials + labor + machine + overhead allowance
Example
$20 materials + $12 labor + $1 machine + $3 overhead = a $36 unit cost. No price below $36 makes sense — and a real price sits well above it.
In practice
The moment a maker sees the honest unit cost of a piece they've been selling cheaply is usually the moment their pricing changes for good.
Common mistakes
- Stopping at materials and calling it the unit cost.
- Leaving overhead out, so the base is too low and every price follows it down.
- Not updating unit cost when material prices or your labor rate change.
How CrafterBy handles it
Unit cost is exactly what CrafterBy computes for every product — materials, labor, machine, and overhead — and keeps current as your inputs change.