What is Cost of Goods and why you should track this metric?

Cost of Goods Sold (COGS) is the direct costs associated with producing or dropshipping the products you sell on TikTok Shop. This includes the cost of materials and direct labor used in creating the product. COGS is an important metric for businesses because it is subtracted from revenue to determine a company's gross profit.

Understanding COGS helps merchants calculate net profit, set pricing strategies, manage inventory, and assess profitability. It does not include indirect expenses such as distribution costs, sales force costs, and other overhead costs.

Setting up Cost of Goods for your shop

In the left side menu, click on Cost of Goods
The setting page will look similar to this:



By default, the COGS of all products is manage on the variant level. To start editing the COGS value of a variant, click anywhere on the product's row or click on the dropdown arrow like below.



Enter the COGS for your variants one by one in the Cost of Goods Sold column



When you are done editing your COGS, make sure to apply this cost to your orders in the past. To do this, click on the check box of edited products/variants, or select all available products in your shop.



Click Recalculate product past orders button to start applying the COGS to your past orders and view it in the Orders Report.

Setting up COGS on the Product level

If the products you are selling have the same COGS value across all variants, you can toggle on the product level when editing COGS to quickly edit and manage the COGS for your shop.

Updated on: 18/11/2024