Unit Cost - GCSE Geography Definition

Unit cost is the amount of money it takes to make one item or deliver one service. It is calculated by adding up all the costs involved, like materials and labour, and then dividing that total by the number of items made or services provided. Understanding unit cost is important in geography because it helps explain how businesses decide where to set up their factories or stores. For example, if a company can keep its unit costs low, it might be able to sell its products at cheaper prices, which could give it an advantage over its competitors.