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Marginal Cost Calculator
Marginal cost is what it costs to produce one more unit. Enter total cost and quantity before and after a change in output; the calculator divides the change in cost by the change in quantity and shows the average cost per unit at both levels for comparison.
- Change in total cost
- $900.00
- Change in quantity
- 100 units
- Average cost before
- $10.00
- Average cost after
- $9.91
Saved setups
Save a set of inputs you reuse — your usual rate, your loan, your room sizes — and load it back in one tap.
Your recent calculations
Results you calculate here are kept on this device so you can come back to them.
Formula
How to use it
- Enter total cost and quantity at the current level of output.
- Enter total cost and quantity at the new level.
- Read the marginal cost per extra unit.
- Compare it with average cost and with your selling price.
Worked examples
Total cost rising from $10,000 to $10,900 as output goes from 1,000 to 1,100 units
- Change in total cost
- $900.00
- Change in quantity
- 100 units
- Marginal cost per unit
- $9.00
- Average cost before
- $10.00
- Average cost after
- $9.91
Total cost rising from $25,000 to $27,400 as output goes from 500 to 560 units
- Marginal cost per unit
- $40.00
- Average cost before
- $50.00
- Average cost after
- $48.93
Marginal cost versus average cost
Average cost spreads every cost, including fixed costs, over all units. Marginal cost looks only at what the extra units add. Fixed costs do not change when you make a few more, so marginal cost is mostly materials, energy and extra labor.
When marginal cost is below average cost, making more pulls the average down — in the first example here, extra units at $9 lower the average from $10.00 to $9.91. When marginal cost is above average cost, each extra unit pulls the average up.
Using it for decisions
An extra order is worth taking if the price covers its marginal cost, even if it is below your average cost — as long as it does not displace full-price sales or require new fixed costs. In economic theory, profit is highest at the output where marginal cost equals marginal revenue.
Marginal cost usually falls at first as you gain efficiency, then rises as you hit capacity: overtime pay, rush shipping, a second shift.
Questions people ask
How do you calculate marginal cost?
Divide the change in total cost by the change in quantity. If cost rises from $10,000 to $10,900 when output rises from 1,000 to 1,100 units, marginal cost is $900 ÷ 100 = $9 per unit.
Why is marginal cost lower than average cost?
Because average cost includes fixed costs such as rent, which do not increase when you produce more. Marginal cost counts only the extra spending.
Can marginal cost be higher than average cost?
Yes, when you push past efficient capacity. Overtime wages, expedited materials or extra equipment make the next units more expensive than the ones before.