It is an accounting principle matching the cost of an item and its sale. On Amazon, the cost of goods sold (COGS) is an expense. The value of COGS will vary depending on the accounting standards applied in the calculation. Since COGS is deducted from the sale price, the higher is the COGS, the lower is the profit margin.Ĭost of goods sold is also referred to as "cost of sales", therefore when you wonder how to calculate cost of sales, you need to compute the COGS. Sales COGS includes the costs and expenses associated with the production of goods, however COGS expense excludes overhead costs such as marketing, distribution, etc. This amount includes the cost of the materials and labor needed to produce the item (or its cost when you buy and resell it). What Is the Cost of Goods Sold?Ĭost of goods sold (COGS) refers to the costs of producing (or acquiring) the goods sold by a seller. In this post, we will tell you what is Amazon cost of goods sold and how to calculate it. To calculate your monthly gross profit, you need to account for the expenses related to the cost of goods sold, since the profit margin is the difference between the sale price and the cost of goods. When you know the profit margin you earn, you can see how much you can invest in your business expansion. Also, on Amazon, your performance influences your Account Health Rating.ĭoing your finance, you need to each month account for the inventory value and expense to maintain turnover rates and plan for growth. Doing sales on the platform means that you are proactively developing your business, monitor your inventory KPIs and figure out rising or falling trends in order to timely eliminate the problems and change the strategy you apply. When you sell on, as everywhere, it is very important to monitor your product's profitability, margins, and expenses to successfully run your business. Read the article and learn how to calculate the cost of sales. A basic concept like Amazon's Сost of Goods Sold (COGS for short) is easy to understand.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |