Ask from different people in your plant what a tablet costs and you may get three answers the price of the raw materials, the standard cost in the finance system, and a number someone worked out on a spreadsheet last year. The useful answer is the actual cost of each good tablet that leaves the plant, because that is the only number that shows what yield, scrap and rework really do to the business.
All prices and rates are tentative in generic currency units (CU), so replace them with currency of your own country.
The idea: Divide the whole cost by the good tablets
The formula is simple, and the important part is the denominator:
Good tablets = Theoretical tablets × Overall yield % ÷ 100
Dividing by the theoretical number of tablets flatters the cost, because the plant paid for material and time that produced tablets which were never sold. Dividing by good tablets carries the loss into the price.
Batch Size Calculator, which scales a master formula into total batch weight, API load and excipient quantities.
The four cost groups
- Materials. The API, excipients and coating material actually dispensed. The API quantity must include the assay correction, because the plant pays for what it weighs, not for the label claim. See the API Requirement Calculator and the guide to reading a certificate of analysis.
- Labour The operator and supervisor hours charged to the batch, multiplied by the hourly rate.
- Machine and utility overhead
Depreciation, maintenance, power, steam, compressed air and cleaning, usually charged per machine-hour. - Packaging materials
Foil, film, cartons, leaflets and labels, and the cost of printed material that is rejected or destroyed.
Quality control, warehousing and general site overheads can be added as a further percentage if your finance team allocates them to the batch.
Practical Example
A batch has a theoretical size of 400,000 tablets of 400 mg, each containing 250 mg of API. The overall yield from dispensing to packed product is 95%, so the plant packs 380,000 good tablets.
| Item | Basis (illustrative) | Cost (CU) |
|---|---|---|
| API | 100.0 kg needed ÷ 0.99 assay = 101.01 kg, at 120 CU/kg | 12,121.21 |
| Excipients | 60 kg at an average of 3.5 CU/kg | 210.00 |
| Coating material | 4.8 kg dry coating at 25 CU/kg | 120.00 |
| Labour | 60 operator-hours at 6 CU/h | 360.00 |
| Machine and utility overhead | 30 machine-hours at 40 CU/h | 1,200.00 |
| Packaging materials | 0.010 CU per tablet × 400,000 | 4,000.00 |
| Total batch cost | 18,011.21 |
- Good tablets = 400,000 × 0.95 = 380,000.
- Cost per good tablet = 18,011.21 ÷ 380,000 = 0.04740 CU.
- Cost if the yield had been 100% = 18,011.21 ÷ 400,000 = 0.04503 CU.
- The yield loss adds 0.00237 CU per tablet, which is 5.3% on top of the ideal cost.
The batch total is the same in both cases, so every tablet lost is paid for by the tablets that remain.
Where the money goes
| Component | Cost per good tablet (CU) | Share of cost |
|---|---|---|
| API | 0.03190 | 67.3% |
| Packaging | 0.01053 | 22.2% |
| Machine and utility overhead | 0.00316 | 6.7% |
| Labour | 0.00095 | 2.0% |
| Excipients | 0.00055 | 1.2% |
| Coating material | 0.00032 | 0.7% |
| Total | 0.04740 | 100% |
In this example the API and the packaging account for about 90% of the cost. That is typical for solid dosage forms with an expensive active ingredient. It means that the stages after the API has been added, where a lost tablet carries almost its full cost, matter the most. For the effect of small yield changes over a year, see What a 1% Yield Drop Really Costs.
Try it yourself
Quick calculator (reference only)
Costs are in any currency you choose. The result is the cost of each good tablet, with the extra cost caused by yield loss.
Choosing the right yield
Use the overall yield from dispensing to finished packs, which is the product of the stage yields. If granulation is 97%, compression 97%, coating 99%, blistering 98% and packing 99%, the overall figure is 0.97 × 0.97 × 0.99 × 0.98 × 0.99 = about 90.4%, far lower than any single stage suggests. The Percentage Yield Calculator and the stage reconciliation tools give each figure.
Standard cost versus actual cost
Finance often sets a standard cost per tablet from the master formula and a planned yield. The actual cost per good tablet from the batch record will differ, and the gap is called a variance. Tracking it by stage tells you whether the cause is price (material cost went up), usage (more material was used), or yield (fewer good tablets came out). Setting realistic limits from your own data helps, as shown in How to Set Yield Limits from Your Own Batch Data.
Common mistakes
- Dividing by the theoretical number of tablets instead of the good tablets.
- Leaving out the assay correction on the API.
- Charging labour for the planned hours and not the actual hours.
- Forgetting that rejected printed packaging is a cost.
- Using a single yield for all stages, so the stage where the loss happens cannot be seen.
- Mixing currencies, price dates or units (kg and g) between lines.
- Ignoring rework: when material is reworked, count the extra labour and time, not only the saved material.
Frequently asked questions
How do you calculate the cost per tablet?
Add the material, labour, overhead and packaging costs of the batch, then divide by the number of good tablets produced, not by the theoretical number.
Should rejected tablets be included in the cost?
Their cost is included in the total, and it is spread over the good tablets. That is why a lower yield raises the cost per good tablet.
Which cost matters most for a tablet?
For many products it is the API, followed by packaging. Your own batch data shows the real split.
How often should the cost be reviewed?
Review it when material prices change, when yield trends move, and at least once a year as part of budget planning.