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What is Unit Cost?

 , updated on December 25, 2016
Unit cost is the expenditure required to produce, distribute and sell one unit of a product or service including both overhead such as advertising and variable costs such as material and labor.
It is common to measure unit cost at the margin, meaning the cost to produce one additional unit. In many cases, unit costs drop as a company benefits from economies of scale but eventually increase as new facilities such as factories are required to produce additional units.
Overview: Unit Cost
TypeBusiness Cost
DefinitionThe cost to produce one unit of a product or service including overhead and variable costs.
Related ConceptsCost Of Revenue
Total Cost Of Ownership

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