Supplier Cost Change Calculator

The calculator compares what one unit earns before and after the supplier cost change. “Contribution” is what is left from the selling price after the costs that rise with each unit sold. “Margin” is that contribution as a share of the selling price.

The effect on each unit

1. Cost change = new supplier cost − old supplier cost
2. Cost change % = cost change ÷ old supplier cost
3. Variable cost per unit = supplier cost + other variable cost
4. Contribution per unit = selling price − variable cost per unit
5. Margin = contribution per unit ÷ selling price

Contribution and margin are worked out twice, with the old supplier cost and with the new one. If the old supplier cost is 0, no percentage change is shown.

The prices in the comparison

1. Keep current price: your selling price, with the new supplier cost
2. Pass on a share of the change = selling price + cost change × the share you enter
3. Same contribution per unit = selling price + cost change
4. Same margin = new variable cost per unit ÷ (1 − old margin)

No option is recommended. Keeping the same contribution protects the money earned on each unit; keeping the same margin protects it as a share of the price, which needs a bigger price change. Leave the share empty to hide that row.

A price that keeps your contribution or margin is rounded up to the next penny, so it never falls short of what it is meant to protect. A price that passes on a share is rounded to the nearest penny. Each row is then worked out from the price shown.

If you enter units sold

1. Contribution for the period = contribution per unit × units sold
2. Change for the period = contribution after − contribution before
3. Units needed at current price = contribution before ÷ new contribution per unit

Units needed is the number you would have to sell, at your current price, to earn the same contribution as before. It is not rounded down: if you can only sell whole units, the next whole number is given.

When a unit does not cover its variable costs

1. Break-even price = new supplier cost + other variable cost
2. Price rise to break even = break-even price − selling price

The break-even price is where one unit covers its variable costs and no more, rounded up to the next penny. It covers variable costs only and does not guarantee an overall business profit. If the product was already breaking even or losing money before the change, the comparison is not shown, because there was no contribution to protect, and no sales target is given: selling more units at a loss adds to the loss.

A product sells for £24. The supplier cost rises from £12 to £13.80 a unit, there are no other variable costs, and 1,000 units are sold in a typical period.

The effect on each unit

The cost change is £13.80 − £12 = £1.80, which is £1.80 ÷ £12 = 15%. Contribution per unit falls from £24 − £12 = £12 to £24 − £13.80 = £10.20. Margin falls from £12 ÷ £24 = 50% to £10.20 ÷ £24 = 42.5%.

Over the period

Contribution falls from £12 × 1,000 = £12,000 to £10.20 × 1,000 = £10,200, which is £1,800 less. To earn £12,000 at the current price would take £12,000 ÷ £10.20 = about 1,176.5 units, 17.6% more than now.

The prices in the comparison

Passing on 50% of the change gives £24 + £1.80 × 50% = £24.90, which leaves £11.10 a unit. A price of £24 + £1.80 = £25.80 keeps the same £12 contribution on each unit. A price of £13.80 ÷ (1 − 50%) = £27.60 keeps the same 50% margin.

• The comparison assumes you sell the same number of units at every price. A different price may change how much you sell, and the calculator does not estimate that.
• It covers one product at one selling price.
• Other variable costs per unit are assumed to stay the same.
• Use every money figure on the same basis, for example all excluding VAT.
• No option is recommended. Each one protects a different outcome, and the right one depends on your customers and your market.
• Fixed costs such as rent and salaries are not included. A break-even price covers variable costs only and does not guarantee an overall business profit.
• Amounts are shown to two decimal places. If your unit costs are fractions of a penny, enter the cost and price for a pack or case instead.
• The currency setting changes the symbol only. It does not convert between currencies.
• Results are a planning aid based on the figures you enter. They are not financial or accounting advice.