Calculate accurate product costs based on raw materials, labor, and overhead expenses
✓ Free to download · ✓ Excel 2016+ and Google Sheets · ✓ Custom version in 24h
Product cost is rarely just materials. This template builds it up in layers — material, labour, overhead absorption, freight — so you can see which layer is moving when margin drifts.
The actual columns, with sample rows
| A | B | C | D | E | F | G |
|---|---|---|---|---|---|---|
| 1 | SKU | Material | Labour | Overhead | Freight | Unit cost |
| 2 | CHAIR-01 | 35.45 | 12.80 | 8.60 | 4.20 | 61.05 |
| 3 | TABLE-02 | 88.10 | 21.40 | 14.30 | 9.80 | 133.60 |
| 4 | SHELF-03 | 22.90 | 7.20 | 4.80 | 3.10 | 38.00 |
| 5 | STOOL-04 | 18.60 | 6.40 | 4.30 | 2.90 | 32.20 |
Why each one is written the way it is
=[@Material]+[@Labour]+[@Overhead]+[@Freight]
Fully loaded unit cost. Keeping the layers as separate columns is the whole point — a single cost figure cannot tell you why margin moved.
=[@[Minutes]]/60*LabourRate
Labour cost from standard minutes and one rate cell, so a wage change updates every product at once.
=TotalOverhead/TotalDirectHours*[@[Minutes]]/60
Overhead absorbed on direct labour hours. Simple, defensible, and far better than spreading overhead evenly per unit — which overcharges cheap products and undercharges complex ones.
=([@Price]-[@[Unit cost]])/[@Price]
Gross margin per product, the ranking that should drive the pricing review.
A worked example with real numbers
A workshop priced everything at a 45% markup on material cost. Building cost in layers showed the labour-heavy stool absorbing 34 minutes against the chair's 21, and its true margin was 11% against the chair's 38%. Repricing the stool by €6 — under 5% of its retail price — moved it to 24% without any measurable effect on volume.
Tab by tab
| Tab | Contents |
|---|---|
| Costing | The layered build-up per SKU. |
| Materials | Component costs, linked to the BOM if you use one. |
| Rates | Labour rate, overhead pool and absorption basis — the only inputs. |
| Margin | Price against loaded cost, ranked. |
| README | How overhead is absorbed and how to change the basis. |
What is included, and what to look at next
Specific to this workbook, not generic
Per direct labour hour in almost every case. Allocating evenly per unit makes a two-minute product carry the same overhead as a two-hour one, which distorts every pricing decision that follows.
Quarterly, or immediately after a material price change above about 5%. Standard costs that are a year old produce variances that tell you nothing useful.
Add a currency and rate column on the Materials sheet and cost in your reporting currency. Fixing the rate for the period is usually better than a live rate, so that cost changes are attributable.
"This costing template has transformed our pricing strategy. We now have complete visibility of our costs and can make data-driven pricing decisions."