Calculating Cost of Goods Sold
What is Cost of Goods Sold?
Why It’s Important to Calculate COGS
Accurate COGS data not only helps set the floor for pricing, it helps stores understand how to best market products based on Gross Margin (Gross Margin = Revenue – COGS). In other words, a t-shirt with a $10 Gross Margin could be a good candidate for a scalable email marketing campaign, while a TV with a $200 Gross Margin could be a good candidate for more expensive forms of marketing such as Paid Search. In addition to marketing considerations, stores can use COGS to price products so that margin is available to pay for operating expenses related to maintaining a digital presence. Examples of these operating expenses include web hosting fees, development expenses, or the cost of maintaining an office space.
Product Pricing Strategies
1. Cost-Plus Pricing
2. Target Return Pricing
3. Competitive Pricing
4. Value-Based Pricing
Glew Helps with Cost of Goods Sold
Our tool allows users to import COGS data in bulk using a CSV template, and also provides the ability to modify COGS data for individual products.
Integrated Cost of Goods Sold data in Glew helps ecommerce stores optimize advertising spend relative to product profitability and move away from a generalized approach to product marketing.