![]() ![]() Unit Cost of Duties, Tariffs, & Freight) = Total Landed COGSUnderstanding the total COGS for each SKU allows you to understand how to price your products, control your profitability, and kill the products that aren’t serving your business. Unit CostIn order to calculate your total landed COGS, add your loaded Unit Costs to your total Factory Price.įactory Price + (Avg. Unit CostOrįlat Rate Percentage x Individual SKU Factory Price = Avg. Total Landed Expense / Total # of Units = Avg. Quantity Purchased x Unit Price = Factory PriceLoad the rest of your costs by calculating the other expenses of shipping and acquiring your product from the factory, such as duties, tariffs, and freight costs. Multiply the number of units you’ve purchased by the price you paid for each unit to get the factory price for each unit. Start by listing all of your SKUs next to their basic unit price. The calculations for landed COGS are more simple than you think! The equations below will correspond with the examples in the video at the beginning of this post, so if you’d like to see the numbers in action, feel free to follow along there. In accrual accounting ( which you should be using!), you’ll expense your products in the month you sell them, not the month you purchase them. Landed COGS are an important calculation that, when broken down, can help you understand how to price your items as well as figure out how much it costs you to acquire your products before they hit your sales channel. ![]() Immediately following will be your Cost of Goods Sold category, which includes your landed COGS (which you’ll learn to calculate below) and expenses like Amazon FBA fees and commissions. ![]() The first category in your P&L should encompass all of your sales channels and conclude with your net profit for the month. The first step to getting a handle on your COGS is making sure your profit and loss statement is set up correctly. In this updated post, Tyler explains how to calculate COGS from your e-commerce P&L. For the original post, click here.ĬOGS is a point of contention for a lot of our clients and something we get a lot of questions about. This is an updated version of a previous post on calculating COGS. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |