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Tuesday, September 27, 2011

Business Cost Calculators - Putting Microsoft Excel to Work for You

Appropriately priced goods and services are an integral part of a successful business.   One of the most popular products at is a customized cost calculator spreadsheet, and is the subject of this spotlight. 

The Cost Calculator spreadsheet is customized to work for the customer’s needs, with clearly marked places for the customer to input pricing and bulk information for raw materials, other costs, and sell prices for goods and/or services.  The spreadsheet uses this information, along with any other factors important for the business, to automatically calculate the costs per item and profit margins.  The spreadsheet also generates a report with a table and graph showing the relative costs of materials used to create the product.  The customer can then make adjustments to bulk materials costs and/or sell prices and understand how the changes will affect the bottom line.

As an example, imagine you own a pizza restaurant and need to know what to charge for your pizzas.  Put very simply, each pizza is made up of dough, sauce, cheese, and toppings.  Since these items are all purchased in bulk, or perhaps even made from scratch, there will be formulas programmed into the spreadsheet to determine costs of ingredients per pizza, including conversions from bulk purchased quantities (say gallons or pounds) to the small measured quantities (ounces or grams) that go into each sized pizza. 

Costs and pricing will need to be calculated for each size and type of pizza offered on the menu.   Prices for toppings can be generalized based on the most expensive or the average topping, or however you choose.  The cost of boxes and plastic table top stands for take out or delivery should be factored in as well.  

This tool will help you understand the actual costs associated with making pizzas.  You can then understand how an increase in the price of pepperoni might affect your business, for example.  You can also understand what it really means to your bottom line if one of your employees puts twice as much cheese on every pizza. 
Prices for raw materials are constantly changing, so this exercise should also be performed at regular intervals or whenever costs change.  A customized Cost Calculator spreadsheet makes it easy to update changes and re-calculate pricing or costs with very little effort.

If you need help customizing a Microsoft Excel spreadsheet to meet your needs, please contact me at or visit my website,

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