1. What is Profit Per Unit?

Profit per unit is the difference between the selling price of a single item and its cost. It represents the amount earned from each unit sold after accounting for production or acquisition costs.

2. How Does the Calculator Work?

The calculator uses the simple profit formula:

Where:

• \( Unit\ Price \) — Selling price of one item
• \( Cost \) — Cost to produce or acquire one item

Explanation: The calculation shows how much you earn from each unit sold after covering its direct costs.

3. Importance of Profit Calculation

Details: Understanding per-unit profit helps businesses set appropriate pricing, determine product viability, and make production decisions. It's fundamental for financial planning and strategy.

4. Using the Calculator

Tips: Enter the unit price and cost in your local currency. Both values must be positive numbers. The calculator will show the profit per unit.

5. Frequently Asked Questions (FAQ)

Q1: Should I include all expenses in the cost?
A: For per-unit calculations, include only direct costs associated with producing/acquiring that specific unit. Overhead costs are typically calculated separately.

Q2: What if my profit is negative?
A: A negative profit (loss) means you're selling below cost. This might be strategic for some businesses but is generally unsustainable long-term.

Q3: How does this relate to markup?
A: Markup is profit expressed as a percentage of cost. If cost is $10 and profit is $5, markup is 50%.

Q4: Should I use this for service businesses?
A: Yes, if you can quantify your "unit" (e.g., one hour of service), this calculation works the same way.

Q5: How often should I calculate per-unit profit?
A: Regularly, especially when costs change. Many businesses review this with each batch or at least quarterly.