Unit Cost

Accounting Corporate Finance Financial Terms Dictionary

Contents

As a rule, unit costs are the total costs associated with the creation of one unit of a product or service.

Unit cost measures targeting products will vary by business.
A large organization can reduce the unit cost of production due to economies of scale.
Cost is useful in gross profit margin analysis and forms a baseline for the market price of the offer.
Companies strive to maximize profits by reducing unit costs and optimizing the market price of the offer.