How to calculate your cost per item

Knowing what one finished product costs to make is the foundation of pricing, margins, and knowing which products are actually worth selling. The method is simple, and it is the same for a candle, a bar of soap, a necklace, or a mug:

  • Cost per unit of a material is the pack price divided by how many units are in the pack. A $24 bag of wax with 5000g is $0.0048 per gram.
  • Cost of that material per item is the cost per unit times how much you use. 200g of that wax is $0.96 per candle.
  • Total material cost per item is the sum across every material: wax, wick, jar, fragrance, label, and so on.

This is what a maker means by a recipe or a bill of materials. Get it right and everything downstream, pricing and margin, is built on solid ground.

From cost to price

Material cost is the start, not the finish. Add your labor and overhead, then a margin, to reach a price. Once you have your material cost here, carry it into the handmade pricing calculator to set a price that actually pays you.

Keep it accurate as prices change

Material prices drift, and when they do, every product that uses them costs more. Stockria stores a bill of materials for each product and rolls up the cost automatically, so when a supplier raises a price you can see which products need a new price. Start free for up to 250 items, or read the candle and soap makers guide.

Frequently asked questions

How do I calculate the cost to make one product?

For each material, divide what you paid for the pack by how many units are in it to get a cost per unit, then multiply by how much you use per finished item. Add those up across every material and you have your material cost per item. For example, a $24 bag of wax holding 5000g used at 200g per candle costs $0.96 of wax per candle.

What is a bill of materials?

A bill of materials (BOM), sometimes called a recipe, is the list of materials and quantities that go into one finished product. It is how makers track raw materials and finished goods together: when you build or sell a product, the materials draw down automatically. This calculator builds one for a single product; Stockria stores one per product.

Should I include labor in my product cost?

This calculator covers material cost, which is the foundation. Your full cost also includes labor and overhead. Once you have your material cost here, use the handmade pricing calculator to add labor and overhead and set a price with a real margin.

Is this recipe cost calculator free?

Yes, free with no signup. Your cost is only right while your material prices are, though. Stockria stores your bills of materials and updates the rolled-up cost when a supplier price changes, free for up to 250 items.

Put this calculator on your site

Run a maker, craft, or small-business blog? Embed this calculator for free. Paste the snippet below where you want it to appear.