How to Do Costing Using a Spreadsheet
A complete guide for Filipino SMEs on listing all items, quantities, unit prices, and expenses to know your true cost per unit
What you'll learn in this costing spreadsheet guide
This spreadsheet costing guide for SMEs in the Philippines walks you through setting up a simple costing sheet, listing all expenses, calculating cost per unit, and avoiding common costing mistakes.
For more business tools and guides, also see our Food Pricing Strategy Guide , Basic Bookkeeping Guide , and How to Validate Your Business Idea .
To prepare a simple budget for your business costs , you can also use our Budget Calculator .
What Is Costing and Why Does It Matter?
Costing Means Knowing What You Spend
Costing is the process of listing every single expense involved in producing your product or delivering your service. From raw materials to packaging to electricity, everything counts. When you know your total cost, you know your baseline, the minimum price you need to charge to avoid losing money.
A Costing Spreadsheet Is Your Simplest Tool
A costing spreadsheet is just a table where you list all items, quantities, unit prices, and total costs. You can use Google Sheets (free), Excel, or even a notebook. The spreadsheet automatically calculates totals so you always know your cost per unit.
Direct Costs vs Indirect Costs
Direct costs are expenses you can trace directly to one product, like flour for a bakery or fabric for a tailor. Indirect costs are shared expenses like rent, electricity, and water. Both must be included in your costing sheet to get an accurate picture.
Why You Need a Costing Spreadsheet
You Set the Right Price
When you know your exact cost per unit, you can set a price that covers expenses and gives you profit. No more guessing or copying competitors' prices blindly.
You Spot Where Money Leaks
A costing sheet reveals which materials are eating up your budget. Maybe one supplier charges more, or a certain ingredient has gotten more expensive. You can negotiate or switch suppliers.
You Make Confident Business Decisions
Should you offer a discount? Can you afford a bulk order? Should you raise prices? With accurate costing data, you answer these questions with numbers, not feelings.
What Happens When You Don't Track Costs?
Many Filipino businesses close because they priced too low without realizing it. They thought they were making money, but hidden costs like electricity, transportation, and spoilage were eating their margins. Without a costing spreadsheet, you are flying blind.
How to Set Up Your Costing Spreadsheet (Step-by-Step)
Step 1: Open Google Sheets or Excel
Go to sheets.google.com and create a new blank spreadsheet. Name it "Costing Sheet - [Your Business Name]". This will be your master costing document.
Step 2: Create Your Column Headers
In row 1, type these headers across columns A to F:
A: Item Name | B: Category | C: Quantity | D: Unit | E: Unit Price (PHP) | F: Total Cost (PHP)
Step 3: List All Direct Materials
Start listing every ingredient or material you use. For a food business: rice, meat, vegetables, cooking oil, seasoning, packaging. For a service: supplies, materials used per client. Put each item on its own row.
Step 4: Add Indirect Costs (Overhead)
Below your direct materials, list indirect costs: electricity, water, rent, gas, transportation, wages. Estimate how much of each goes into one batch or one month of production.
Step 5: Set Up the Total Cost Formula
In column F (Total Cost), enter the formula: =C2*E2 (Quantity multiplied by Unit Price). Copy this formula down for all rows. At the bottom, use =SUM(F2:F20) to get your grand total.
Step 6: Calculate Cost Per Unit
Below your grand total, add a cell for "Units Produced" and another for "Cost Per Unit". Use the formula: =Total Cost / Units Produced. This number is your baseline, the minimum you must charge per unit.
Essential Costing Checklist
Make sure you include all of these in your costing spreadsheet:
Raw materials — all ingredients, supplies, or components used in production
Packaging — boxes, bags, labels, tape, stickers, wrappers
Direct labor — wages of workers who directly make the product
Electricity and water — portion used for production
Rent — portion of space used for business operations
Transportation and fuel — delivery, picking up supplies, going to markets
Gas or LPG — cooking fuel for food businesses
Marketing and selling fees — online platform fees, flyers, promos
Shrinkage and spoilage — estimated waste, expired goods, damaged items
Your own labor — pay yourself even if you are the owner. Your time has value.
How to Decide What Goes Into Your Costing Sheet
The Simple Rule: If You Spend It to Produce, Include It
Ask yourself: "Did I spend money on this to make my product or deliver my service?" If yes, it goes in the sheet. If it is purely personal (like your family's groceries), it does not belong.
How to Handle Shared Costs (Rent, Utilities)
If your business shares space with your home, estimate the percentage used for business. Example: if your business uses 30% of your home's space, include 30% of rent and electricity in your costing sheet.
How to Allocate Overhead Fairly
Divide monthly overhead by the number of units produced that month. Example: if rent is PHP 5,000/month and you produce 500 units, that is PHP 10 per unit for rent. Do the same for electricity, water, and other shared costs.
Warning: Don't Skip Indirect Costs
Many owners only list direct materials and forget rent, electricity, and labor. This makes your cost per unit look lower than it really is. You think you are profiting, but you are actually losing money on every sale.
How to Calculate Your Cost Per Unit
The Formula
Cost Per Unit = Total Cost / Number of Units Produced
This is the most important number in your business. It tells you the absolute minimum you must charge to break even.
Spreadsheet Formulas to Use
=SUM(F2:F20) — adds all total costs=C2*E2 — multiplies quantity by unit price for each row=SUM(F2:F20)/B22 — divides grand total by units produced to get cost per unit
Example: Siomai Food Cart (Per Batch of 100 Pieces)
| Item | Category | Qty | Unit Price | Total |
|---|---|---|---|---|
| Ground pork | Direct Material | 2 kg | 220.00 | 440.00 |
| Siomai wrapper | Direct Material | 1 pack | 80.00 | 80.00 |
| Seasoning and spices | Direct Material | 1 set | 50.00 | 50.00 |
| Packaging (boxes, sauce cups) | Direct Material | 100 pcs | 2.50 | 250.00 |
| LPG (cooking gas) | Overhead | 1/4 tank | 150.00 | 150.00 |
| Helper wages (per batch) | Direct Labor | 1 person | 200.00 | 200.00 |
| Electricity + water (share) | Overhead | 1 batch | 80.00 | 80.00 |
| Transportation (market run) | Overhead | 1 trip | 100.00 | 100.00 |
| Total Cost (100 pieces) | 1,350.00 | |||
| Cost Per Unit (1,350 / 100) | 13.50 | |||
In this example, each piece of siomai costs PHP 13.50 to make. If you sell at PHP 25 per piece, your gross margin is PHP 11.50 per unit. Now you know your numbers.
Tips for Maintaining Your Costing Spreadsheet
Update Regularly
Review your costing sheet monthly or every time supplier prices change. Prices of meat, rice, and packaging can increase without notice. Stale numbers lead to wrong prices.
Keep Receipts and Invoices Organized
Take a photo of every receipt and save it in a folder labeled by month. This makes it easy to verify your spreadsheet entries and prepare for tax season.
Use Color Coding for Categories
Color-code rows by category: yellow for direct materials, blue for overhead, green for labor. This helps you see at a glance where your biggest costs are.
Back Up Your Spreadsheet
If using Google Sheets, it auto-saves to the cloud. If using Excel on your computer, save a copy to Google Drive or email it to yourself weekly. Never lose your costing data.
Create a Template for Repeated Use
Once your sheet is set up, duplicate it for each new product or batch. This saves time and ensures consistency across all your costing calculations.
Common Costing Mistakes to Avoid
Forgetting Hidden Costs
Electricity, water, gas, transportation, and spoilage are easy to forget but add up fast. A batch that looks profitable on paper may actually be losing money when hidden costs are included.
Not Updating Prices When Suppliers Change
Supplier prices change often. If your spreadsheet still shows last year's prices, your cost per unit is wrong. Update every month or every time you get a new receipt with different prices.
Mixing Personal and Business Expenses
Your family's groceries should not be in your costing sheet. Only include expenses directly related to producing your product or service. Mixing them inflates your costs and leads to overpricing.
Not Including Your Own Labor
Even if you are the owner, your time has value. If you spend 4 hours a day making products, include a reasonable wage for yourself in the costing sheet. Otherwise, your "profit" is really just unpaid labor.
Ignoring Shrinkage and Waste
Spoiled ingredients, damaged packaging, and rejected products all cost money. Add a 5-10% buffer for waste in your costing sheet so your numbers reflect reality.
Conclusion: Know Your Costs, Grow Your Profits
Costing Is the Foundation of Every Profitable Business
You cannot set the right price without knowing your exact cost. A simple spreadsheet with all your items, quantities, and unit prices gives you that baseline. Once you know your cost per unit, every pricing decision becomes clear and confident.
Start Simple, Improve Over Time
You do not need fancy accounting software. Start with a free Google Sheet, list everything you spend, and calculate your cost per unit. As your business grows, your spreadsheet grows with you. The important thing is to start today.
Your Numbers Will Guide You
When you know your costs, you know if a discount makes sense, if you can afford to hire help, or if you need to raise prices. Your costing spreadsheet becomes your most trusted business advisor, always ready with the numbers you need.
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