The high-low method is a quick way to estimate cost behaviour from past data, using only two points. It is simple but sensitive to unusual months; regression gives a better fit when you have many data points.
How to use the High-Low Method Calculator
- Cost at highest activity
- Units at highest activity
- Cost at lowest activity
- Units at lowest activity
- Units to estimate
Results update as you type, and every field accepts the units shown in its menu.
How it works
Enter the total cost and units at the highest and lowest activity levels, and the activity level you want to estimate.
Tips
- Use figures for the same period (a month, a quarter or a year) for every input so ratios compare like with like.
- Track the metric over time – the trend usually tells you more than a single value.
- Compare your result with industry benchmarks, which vary a lot between sectors.
- Treat the result as a starting point for a decision, then check the assumptions behind each input.
Common mistakes to avoid
- Mixing monthly and yearly numbers in the same calculation.
- Using revenue where the formula needs profit (or the other way round).
- Forgetting hidden costs such as taxes, fees, overheads or your own time.
Inputs explained
| Field | What to enter |
|---|---|
| Cost at highest activity | Amount in your currency |
| Units at highest activity | A number |
| Cost at lowest activity | Amount in your currency |
| Units at lowest activity | A number |
| Units to estimate | A number |
What each result means
- Variable cost per unit = ([Cost at highest activity] – [Cost at lowest activity])÷([Units at highest activity] – [Units at lowest activity])
- Total fixed cost = [Cost at highest activity] – [Variable cost per unit]×[Units at highest activity]
- Estimated total cost = [Total fixed cost] + [Variable cost per unit]×[Units to estimate]
Example values
How the main result changes when Cost at highest activity changes and everything else stays at the example values above:
| Cost at highest activity | Estimated total cost |
|---|---|
| 15,500 | 16,812.5 |
| 23,250 | 21,656.25 |
| 31,000 | 26,500 |
| 38,750 | 31,343.75 |
| 46,500 | 36,187.5 |
| 62,000 | 45,875 |
Formula
Variable cost per unit = (cost at high − cost at low) ÷ (high units − low units)Fixed cost = cost at high − variable cost × high unitsTotal cost at x = fixed cost + variable cost × xWorked example
Inputs — Cost at highest activity: $31,000; Units at highest activity: 9,000; Cost at lowest activity: $19,000; Units at lowest activity: 5,000; Units to estimate: 7,500.
Results — Variable cost per unit = $3.00; Total fixed cost = $4,000.00; Estimated total cost = $26,500.00.
Frequently asked questions
What is the high-low method?
A cost-accounting technique that uses the highest and lowest activity points to split fixed and variable costs.
What is its main weakness?
It ignores all data except two points, which may be outliers.
Should I pick the highest cost or the highest activity?
Use the highest and lowest activity levels, not costs.
What formula does the High-Low Method Calculator use?
Variable cost per unit = (cost at high − cost at low) ÷ (high units − low units).