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Inventory Planner basics
Calculating cost of goods sold (COGS)
Calculating cost of goods sold (COGS)
Monica avatar
Written by Monica
Updated over a week ago

Cost of goods sold (COGS) is defined as the direct cost of the products your business is selling. For a particular variant, it's calculated as:

COGS = Number of units sold × landing cost price

If the landing cost price is not set, the cost price field is used.

The landing cost price is the total unit cost of a variant, including cost price and related expenses. In addition to the cost being charged by the vendor, it can include shipping & handling and discounts. Landing cost is the cost price in addition to extra expenses - not only the extra expenses. 

Taxes and/or VAT should not be considered in the landing cost price for goods since the profit and margin metrics in Inventory Planner are based on revenue before taxes.

Note: For EU merchants, Inventory Planner automatically excludes VAT from the revenue generated through sales orders. The connected platform (e.g. Shopify) defines when taxes are included and feeds this information automatically into Inventory Planner. Learn more about Shopify's KPI definitions

If you don't see any data showing for COGS, you may need to import or enter your landing cost or cost prices.

The current landing cost (or if landing cost is not set, then cost price) is used to calculate COGS by default - the calculation does not use the historical landing cost price.

By request, the Inventory Planner team can set COGS to calculate based on the historical landing cost prices instead. If you opt to change this setting, Inventory Planner will calculate COGS by working out the COGS per day in the reporting period (units sold × the landing cost price as of that day), then summing those figures together.

Answers the questions

How is COGS (Cost of Goods Sold) calculated and updated?

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