Cost of Doing Business Calculator
Understanding total business costs prevents failure. Calculate comprehensive operating expenses for pricing and planning decisions.
How the Cost of Doing Business Calculator works
Aggregate all business costs: direct, indirect, administrative, and financial. Calculate total costs, unit economics, and minimum viable pricing for sustainable operations.
Many businesses fail from underestimating costs. This calculator captures everything, ensuring your pricing covers all expenses with profit margin.
How it works
Tutorial
Many businesses fail because founders underestimate total operating costs, setting prices too low to sustain operations. Comprehensive cost calculation ensures pricing covers all expenses—direct, indirect, administrative, and financial—with healthy profit margins.
You have two options: use the calculator above for complete cost analysis, or follow this guide to manually calculate total business costs.
The Formula
| Cost Category | Components |
|---|---|
| Direct Costs | Materials + Direct Labor + Production Overhead |
| Indirect Costs | Rent + Utilities + Admin + Marketing + Insurance |
| Total Cost | Direct + Indirect + Financial Costs |
Step-by-Step Calculation
Here’s a comprehensive cost analysis for pricing decisions.
Step 1: Calculate Direct Costs
Identify costs directly tied to production:
| Direct Cost Category | Monthly Amount |
|---|---|
| Raw Materials | $45,000 |
| Direct Production Labor | $28,000 |
| Production Supplies | $3,500 |
| Packaging Materials | $2,500 |
| Total Direct Costs | $79,000 |
Calculation: Sum all production-related costs = $79,000
Step 2: Calculate Indirect Costs
Add all overhead and operating expenses:
| Indirect Cost Category | Monthly Amount |
|---|---|
| Rent & Utilities | $8,500 |
| Administrative Salaries | $15,000 |
| Marketing & Sales | $6,000 |
| Insurance | $2,000 |
| Depreciation | $3,000 |
| Professional Services | $2,500 |
| Total Indirect Costs | $37,000 |
Calculation: Sum all overhead costs = $37,000
Step 3: Calculate Total Cost and Unit Economics
Determine comprehensive costs and pricing needs:
| Step | Calculation | Result |
|---|---|---|
| Direct Costs | From Step 1 | $79,000 |
| Indirect Costs | From Step 2 | $37,000 |
| Financial Costs (loans) | Interest payments | $4,000 |
| Total Monthly Costs | $79,000 + $37,000 + $4,000 | $120,000 |
| Units Produced | Monthly output | 1,000 |
| Cost Per Unit | $120,000 ÷ 1,000 | $120 |
| Min Price (30% margin) | $120 ÷ 0.70 | $171 |
Final Answer: Minimum selling price is $171 per unit
What This Means
At $120 total cost per unit, you need to sell at $171+ to achieve 30% margin. Many businesses fail because they price based only on direct costs ($79), ignoring $41 in overhead and financial costs per unit.
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