Surcharge calculation: calculate costs precisely and set prices

In the world of business management and cost accounting, correct pricing plays a central role. Companies must ensure that their products and services not only cover the costs incurred, but also generate a profit. A proven method for achieving this goal is overhead costing.  

What is overhead costing?

Overhead costing is a widespread method of cost accounting that is used particularly in manufacturing and trade. Its aim is to determine the total costs of a product or service and to derive a suitable sales price from this. This overhead calculation takes into account both direct and indirect costs to ensure that a company covers its costs and makes a profit at the same time.

Direct costs: direct costs at a glance

A central aspect of overhead costing is the distinction between direct costs and overheads. Direct costs are all costs that can be directly allocated to a specific product, such as material costs and wages. These costs are easy to record as they are clearly linked to the manufacture of a specific product or service.

Overheads: surcharges for indirect costs

In contrast to direct costs, there are overhead costs that cannot be directly attributed to an individual product. These include rent, energy costs and administrative expenses. These costs are distributed to the products in the overhead calculation using so-called overhead rates.  

Profit mark-up: Setting the sales price

Once the cost price, which is the sum of direct costs and overheads, has been determined using overhead costing, a profit mark-up is usually added. This ensures that the company not only covers its costs, but also remains profitable. The overhead calculation thus makes it possible to determine a final sales price that covers all costs and allows for a reasonable profit.

Surcharge calculation is particularly popular due to its simplicity and transparency. It helps companies to calculate their prices realistically while keeping an eye on both costs and profits.

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