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Determining Your Costs
Unit cost is your best estimate of the expense of providing the average unit of a specific service. To determine the unit cost for a service, you will need:
- Total annual expenses (direct and indirect)
- Total annual number of units of service you provide
Then apply the following simple formula to arrive at your Unit Cost.
Unit Cost = Annual Program Expenses
(Including Indirect Expenses Allocated to the Program)
Annual Units of Service
Keep in mind that if you are just initiating or developing your service, you will need to use projections or estimates for these numbers.
Every service or program has a different unit cost. You must calculate the unit cost of each of your services.
