Set up Quantity-based COGS or Bundled COGS
The Quantity-Based COGS feature in TrueProfit helps you see a clear picture of your store's profits by figuring out product costs accurately.
If your supplier offers discounts when you buy more units, it's important to break down these bundle costs to understand what each unit costs you. By calculating and entering the cost per unit for each pricing level, you ensure that your profit reports are correct. This easy step helps you better manage your pricing and make smarter business decisions.
Read the step-by-step tutorial below or watch this video for a quick walkthrough:
If you're looking for how to set up COGS in TrueProfit, check out the Setting up Cost of Goods (COGS) for all products article.
Setting up quantity-based for COGS
1.1 How to calculate Cost per unit
Configuring quantity-based COGS on the Product vs. Variant Level
Applying your changes in product costs to all orders in the past
From the Cost of Goods page, go to the product you want to edit cost and click on the clock icon next to the Cost of Good Sold field
In the advanced cost setting, click Add quantity break to start adding your tiered costs
In the first row, enter the maximum number of units for the first tier. The next row will be filled automatically to ensure your setting is correct.
Enter the Cost per unit value for each row.
When suppliers offer products at a tiered pricing structure based on the quantity purchased (buy 1 get 1, buy 2 get 2), you'll need to calculate the cost per unit for each pricing level to set up in the app.
This granular approach ensures that your profit calculations are not skewed by total bundled costs, but rather reflect the incremental cost associated with each additional unit sold. This means you need to establish the Cost of Goods Sold (COGS) incrementally as more units are sold.
For example, the product costs given by your supplier are:
$9 if a customer purchases 1 unit
$15 if a customer purchases 2 units
$20 if a customer purchases 3 units
$25 if a customer purchases 4 units or more
Calculation breakdown:
For 1 unit: The cost per unit is $9.
For 2 units: Calculate the incremental cost: $15 total for 2 units, minus $9 (cost for 1 unit) = $6. Thus, second unit cost = $6.
For 3 units: Total $20 minus $15 (cost for 2 units) = additional $5. So, the third unit cost = $5.
For 4 units or more: Total $25 minus $20 (cost for 3 units) = additional $5. So, fourth unit cost = $5.
To effectively manage your Cost of Goods Sold (COGS), you can choose to set calculations at either the product level or the variant level, based on your business needs.
Ensure the Set to Level toggle is set to 'Product' if you intend to calculate COGS universally for the product, without accounting for individual variants. This method streamlines your COGS under a single calculation, offering a straightforward view of your product
If the Set to Level toggle is set to 'Variant', the app will individually calculate quantity-based COGS for each variant, which will then be summed to reflect the overall product cost.
All the edits you made to a product/variant will be saved and applied to future orders only. If you want to apply new costs to orders in the past as well, you will have to recalculate all past orders in TrueProfit.
Recalculate past orders means applying new changes to all orders that match for all products. If you want to manage different product costs in the past, add COGS periods like the instructions above.
Select the products or variants that you want to recalculate using the checkboxes at the left of the table
When a product or variant is selected, you can see the Re-calculate product past orders button shows up at the top of the table
Click Re-calculate product past orders to start applying and recalculate COGS for all orders in the past of the selected products/variants
If your supplier offers discounts when you buy more units, it's important to break down these bundle costs to understand what each unit costs you. By calculating and entering the cost per unit for each pricing level, you ensure that your profit reports are correct. This easy step helps you better manage your pricing and make smarter business decisions.
Read the step-by-step tutorial below or watch this video for a quick walkthrough:
If you're looking for how to set up COGS in TrueProfit, check out the Setting up Cost of Goods (COGS) for all products article.
In this article:
Setting up quantity-based for COGS
1.1 How to calculate Cost per unit
Configuring quantity-based COGS on the Product vs. Variant Level
Applying your changes in product costs to all orders in the past
Setting up quantity-based for COGS
From the Cost of Goods page, go to the product you want to edit cost and click on the clock icon next to the Cost of Good Sold field
In the advanced cost setting, click Add quantity break to start adding your tiered costs
In the first row, enter the maximum number of units for the first tier. The next row will be filled automatically to ensure your setting is correct.
Enter the Cost per unit value for each row.
How to calculate Cost per unit
Understanding Tiered Cost vs. Cost per unit:
When suppliers offer products at a tiered pricing structure based on the quantity purchased (buy 1 get 1, buy 2 get 2), you'll need to calculate the cost per unit for each pricing level to set up in the app.
This granular approach ensures that your profit calculations are not skewed by total bundled costs, but rather reflect the incremental cost associated with each additional unit sold. This means you need to establish the Cost of Goods Sold (COGS) incrementally as more units are sold.
For example, the product costs given by your supplier are:
$9 if a customer purchases 1 unit
$15 if a customer purchases 2 units
$20 if a customer purchases 3 units
$25 if a customer purchases 4 units or more
Inputting Correct Cost per Unit:
| From unit | To unit | COGS per item | Total cost of items |
|---|---|---|---|
| 1 | 1 | $9 | $9 |
| 2 | 2 | $6 | $15 = $9 (cost of the 1st tier) + $6 (cost of the 2nd tier) |
| 3 | 3 | $5 | $20 = $9 (cost of the 1st tier) + $6 (cost of the 2nd tier) + $5 (cost of the 3rd tier) |
| 4 | ∞ | $5 | $25 = $9 (cost of the 1st tier) + $6 (cost of the 2nd tier) + $5 (cost of the 3rd tier) + $5 (cost of the 4th tier) |
Calculation breakdown:
For 1 unit: The cost per unit is $9.
For 2 units: Calculate the incremental cost: $15 total for 2 units, minus $9 (cost for 1 unit) = $6. Thus, second unit cost = $6.
For 3 units: Total $20 minus $15 (cost for 2 units) = additional $5. So, the third unit cost = $5.
For 4 units or more: Total $25 minus $20 (cost for 3 units) = additional $5. So, fourth unit cost = $5.
Configuring quantity-based COGS on the Product vs. Variant Level
To effectively manage your Cost of Goods Sold (COGS), you can choose to set calculations at either the product level or the variant level, based on your business needs.
Setting COGS at the Product Level
Ensure the Set to Level toggle is set to 'Product' if you intend to calculate COGS universally for the product, without accounting for individual variants. This method streamlines your COGS under a single calculation, offering a straightforward view of your product
Setting COGS at the Variant Level
If the Set to Level toggle is set to 'Variant', the app will individually calculate quantity-based COGS for each variant, which will then be summed to reflect the overall product cost.
Applying your changes in product costs to all orders in the past
All the edits you made to a product/variant will be saved and applied to future orders only. If you want to apply new costs to orders in the past as well, you will have to recalculate all past orders in TrueProfit.
Recalculate past orders means applying new changes to all orders that match for all products. If you want to manage different product costs in the past, add COGS periods like the instructions above.
Steps to recalculate past orders for one or multiple products
Select the products or variants that you want to recalculate using the checkboxes at the left of the table
When a product or variant is selected, you can see the Re-calculate product past orders button shows up at the top of the table
Click Re-calculate product past orders to start applying and recalculate COGS for all orders in the past of the selected products/variants
Updated on: 19/12/2024
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