Marginal cost helps businesses make informed pricing decisions. By knowing the additional cost incurred to produce one more unit, a company can set prices that cover both variable costs and contribute towards fixed costs and desired profit margins.
Page written by Ian Hawkins. Last reviewed on May 14, 2025. Next review due April 6, 2027.
This calculator is intended for illustration purposes only and exact payment terms should be agreed with a lender before taking out a loan.
To calculate the marginal cost, you’ll need information about the change in total cost and the change in quantity produced. Here’s how you can calculate the marginal cost:
Determine the initial total cost: Identify the total cost of production for a specific quantity.
Determine the final total cost: Identify the total cost of production for a different quantity, which is greater than the initial quantity.
Calculate the change in total cost: Subtract the initial total cost from the final total cost. This represents the change in cost.
Change in Total Cost = Final total cost – Initial total cost
Calculate the change in quantity: Determine the difference between the final quantity produced and the initial quantity.
Change in Quantity = Final quantity – Initial quantity
Calculate the marginal cost: Divide the change in total cost by the change in quantity.
Marginal Cost = Change in total cost / Change in quantity
By performing these calculations, you’ll obtain the marginal cost, which represents the additional cost incurred to produce one additional unit of output.
Please note that the concept of marginal cost is applicable in the short run, where some costs may vary with the level of production while others remain fixed.
We work with world class partners to help us support businesses with finance
Swoop Finance Limited helps UK firms access business finance by working directly with businesses and their trusted advisors. We act as a credit broker, not a lender, and do not provide loans or finance products ourselves. We introduce applicants to a panel of lenders, equity funds, and grant agencies based on individual circumstances and creditworthiness.
Commission Disclosure: We typically receive a commission from the finance provider (either a fixed fee or a fixed percentage of the amount you receive) upon successful placement. Different providers pay different rates. For certain lenders, we may have influence over the interest rate, which can impact the total amount payable under your agreement.
Regulatory Information:
FCA: Authorised and regulated by the Financial Conduct Authority as a credit broker (FRN: 936513) and registered as an Account Information Services Provider (Ref: 833145).
ICO: Registered with the Information Commissioner’s Office (Ref: ZA600162); registration can be verified at ico.org.uk.
Company Details: Registered in England & Wales with Companies House (No. 11163382). Registered Address: The Stable Yard, Vicarage Road, Stony Stratford, Milton Keynes, MK11 1BN. VAT Number: 300080279.
Terms: All finance and quotes are subject to status, income, and terms and conditions. Applicants must be aged 18 or over. Guarantees and indemnities may be required. Please refer to our terms and conditions and our complaints procedure for further details.
UK
IRE
AU
CA
US
ZA
NA
yet? Register here!