Articles on: Cost Settings

Setting up Cost of Goods (COGS) for all products

In this article:

What is Cost of Goods?
Setting product cost level for your products
Setting up quantity break COGS and historical values
How to add a COGS in the past for your product/variant

What is Cost of Goods?

Cost of Goods Sold (COGS) or Product Cost is basically the total amount of money you spend acquiring the products you sell online. It's like your "wholesale" price, not including things like marketing, overhead, or shipping.

For example, if you sell a t-shirt for $20 and it cost you $8 to buy from a supplier, your COGS for that t-shirt is $8.

Tracking COGS accurately helps you calculate your profit margin: Remember, your profit is the difference between your selling price and your COGS. Understanding your COGS helps you set competitive prices and ensure you're actually making money on each sale.

See How TrueProfit import your COGS upon installing.

Setting product cost level for your products

In the Cost of Good page, the first column you see is the Set to level setting. This setting lets you manage product cost either on the product level or variant level. If you choose the Variant level, each variant of that product will have a separate COGS value and setting. If you choose the Product level, all variants of that product have only one COGS value and setting.

By default, the Set to level setting is Variant level for all products in your store.

Editing Cost of Goods for products or variants

To change the value of your product costs, you can edit directly on the table for each product/variant for fixed COGS. When done, click the check icon to save your change.

Setting up quantity break COGS and historical values

If your COGS varies by bundle in each order and changed in the past, click on the history icon to open the edit cost page.

In this page, you will find the COGS setting for the entire lifetime of the product/variant with the fixed COGS value.

How to apply quantity break COGS for a product/variant

Step 1: Click Add quantity break to add a new row for unit count

Step 2: In the first row, enter the maximum number of units for the first COGS value. The next row will be filled automatically to ensure your setting is correct.

Step 3: Enter the cost per unit value for each row.

Please note that the cost per unit value is applied to each unit sold in an order. 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

The app doesn't calculate using the total price directly. Instead, you need to find the Cost of Goods Sold (COGS) by subtracting the COGS of a lower level from the higher level's total cost.
Here's how to deduct the COGS value in each level to have the correct Cost per unit with the given costs above:

For orders with 2 units: Total COGS = (1*9) + (1*6) = $15
For orders with 4 units: Total COGS = (1*9) + (1*6) + (1*5) + (1*5) = $25
For orders with 5 units: Total COGS = (1*9) + (1*6) + (1*5) + (2*5) = $30

That means your input in each row will be as follows:

How to add a COGS in the past for your product/variant

As products might have different COGS at different periods . For example, your product costs might be increased or decreased depending on the suppliers, and you should be able to track the changes in product in different time range.

In TrueProfit, the current COGS value is set to cover a product's entire lifetime by default. You can add unlimited COGS periods to manage the historical data of a product or variant, ensuring it matches the correct past orders.

How to edit and add historical COGS:

Step 1: In the Edit COGS page, click Add COGS period

Step 2: Select a starting date for the current and ongoing COGS period. The preceding period will be automatically applied

Step 3: Add your current COGS value and review the product cost in the past to ensure the data is correct.

You can also Duplicate a period and change the date range to keep the existing COGS rule for the product/variant.

Step 4: Add more periods if needed. Once done, click Save to save your changes

Applying your changes in product costs to all orders in the past

If you made edits to the product cost level, COGS, historical COGS, or Handling Fees for a product/variant, the app will save your setting to apply to future orders only. If you want to apply new costs to all orders in the past as well, click Recalculate past orders.

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 instruction above.

Updated on: 10/06/2024

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