Cost of Goods Sold (COGS) refers to the total cost of acquiring the products you sell. It represents how much you spent to get your inventory ready for sale.
For resellers, COGS is one of the most important numbers because it directly impacts your profit and overall business performance.
📊 What Does COGS Include?
COGS is not just the item price—it can include all costs directly tied to getting the product ready to sell, such as:
Buy cost (purchase price)
Sales tax (if applicable)
Shipping from supplier to you
Prep costs (labels, packaging, etc.)
Other direct sourcing costs
👉 Think of COGS as the true cost of your inventory.
💸 Why COGS is Important
1. Determines Your Profit
COGS is a key part of your profit calculation:
Profit = Selling Price – (COGS + Fees + Other Expenses)
👉 If your COGS is inaccurate, your profit will be too.
2. Helps You Price Correctly
Knowing your full cost allows you to:
Set profitable prices
Avoid underpricing items
Maintain healthy margins
3. Improves Financial Tracking
COGS helps you understand:
How much you’re actually investing in inventory
Whether your sourcing strategy is working
How your business is performing over time
4. Important for Reporting & Taxes
COGS is commonly used in financial reports like Profit & Loss statements and is important for accurate bookkeeping.
📈 Simple Example
Category | Amount |
Buy Cost | $10 |
Shipping to You | $2 |
Prep Supplies | $1 |
COGS | $13 |
👉 If you sell the item for $25:
Profit = $25 – $13 = $12 (before fees)
⚠️ Common Mistakes
Only tracking buy cost and ignoring other costs
Forgetting prep or shipping expenses
Inconsistent tracking methods
👉 These can lead to inaccurate profit calculations.
💡 Best Practices
Include all direct costs when calculating COGS
Be consistent in what you include
Update your costs regularly
Keep records for better tracking
💼 How It Helps in AccelerList
In AccelerList, COGS is primarily based on your buy cost and added expenses.
When entered correctly, it allows the system to:
Calculate accurate profit
Show ROI and margins
Generate reliable financial reports
✅ Summary
COGS (Cost of Goods Sold) is the total cost of acquiring and preparing your products for sale. It’s essential for calculating profit, setting prices, and understanding your business performance.