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How is COGS (Cost of Goods Sold) calculated and updated?
How is COGS (Cost of Goods Sold) calculated and updated?
Monica avatar
Written by Monica
Updated over a week ago

COGS or Cost of Goods Sold is calculated as follows:

COGS = number of units sold * landing cost price

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

Landing cost price is the total unit cost for including cost price and related expenses. In addition to vendor cost it includes shipping & handling, and discounts. Landing cost is the cost price in addition to extra expenses (and 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 (eg. Shopify) defines when taxes are included, and this information is fed automatically into Inventory Planner when this is the case.

Learn more about Shopify's KPI definitions

If you do not see any data showing for COGS, this will update when you import or enter your landing cost or cost prices. By default *, the current landing cost (or if landing cost is not set, then cost price) is used to calculate COGS. This calculation is not using the historical landing cost price.

* The Inventory Planner team can customize COGS to calculate based on historical landing cost prices instead by request. In this case, Inventory Planner will take the units sold * the landing cost price as of each day in the reporting period, and sum it together to calculate COGS.

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