Unit cost calculations are important in many businesses and increasingly for Not-for-Profit organisations. They help you understand the cost of each of your activities or products so that you can see which ones are profitable and which are problematic. Unit Costs are a vital part of being informed and knowing what parts of your business to maintain and expand. This means you can be sustainable for the long term.


How to Do Unit Cost Calculations

To start with Unit Cost Calculations you need to work out your formulas first. You can do this work in a spreadsheet or a tool like Calxa. For a quick overview of how to build your unit costs, follow these easy steps.


Record the Non-Financial Information

Whether you’re measuring the number of participants in an activity, the number of widgets you’ve sold or the number of hours you’ve worked, Metrics are the tool for you. You will find them in the Budget Builder in Calxa. Just change the Layout to Metrics by Month.

Add the Metrics you need. Most of the time Sum is the best calculation type. This will add your Metrics if you run a report over multiple months. It makes sense for things like the number of transactions you do. Use End as the calculation type for something where you want the end of period value. This works for Metrics like Shop Area where the value is the same each month.

Record budgets for the year and then update the actuals each month. Just like with your financial budgets, enter the Metrics budgets against the right budget version. Copy and Paste if you need to update one budget from another.


Pull it all together with KPIs

The next step is to create custom KPIs to combine your financial data with your Metrics. You could use the pre-set account group of Total Expenses or create your own group if you need something more specific. Then create a formula for your Unit Cost calculation which would be something like:

[Total Expenses]/[Number of Participants]


To improve that formula and make sure you’re not dividing by zero, use the IF function (just as you would in a spreadsheet) to give:

IF ([Number of Participants] = 0, NULL, [Total Expenses]/[Number of Participants])


To display just your Metric on a report, create a KPI with the formula just a simple

[Number of Participants]


For more ideas on integrating KPIs into your management reports check out our article Get Creative with KPIs.



Chart your Unit Cost Calculations

Compare actuals to budgets easily with a KPI Chart or add the unit costs to any of the budget or Profit & Loss reports. The P&L with Projected Total is great for seeing trends and aberrations, showing actuals for the completed months of the year and budgets for the remainder.

The quickest way to see which reports work with KPIs is to filter the list in the Report Builder for KPIs (you’ll find that in the Value section at the bottom of the list). Then use the options in the Display section to choose Numbers or a chart type.



Working with Unit Costs

The beauty of unit costs is that they will give you visibility over the profitability of your activities, independent of the volume of transactions. While we’ve talked here about costs, the same principles apply to calculating the average revenue per unit. Then you can use the KPI Comparison line chart to compare how they change over time.


To really get going with unit costs, check out our Unit Costing: The Ultimate Guide. It will step you through all you need to know about unit cost calculations.