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COGS

COGS is the cost of producing or acquiring products for e-commerce sellers. It includes raw materials, labor, and overhead costs. COGS is important for calculating gross profit and setting prices.

COGS stands for Cost of Goods Sold. It refers to the direct cost of producing or procuring products. COGS includes the cost of raw materials, labor, and overhead costs that are directly related to the production or acquisition of the products.

For example, if you sells t-shirts through your website, their COGS would include the cost of the fabric, the labor costs to sew the shirts, and the shipping costs to get the shirts to their warehouse.

Published
March 20, 2023
Updated
November 8, 2024

Frequently Asked Questions

A good cost of goods sold (COGS) percentage varies by industry, but generally, a lower percentage is better as it indicates that a company is spending less on producing or acquiring their products. For instance, a company that sells luxury goods may have a higher COGS percentage than a company that sells low-cost items. However, as a general rule of thumb, a COGS percentage that is less than 50% is considered good.

COGS (Cost of Goods Sold) is an expense that represents the cost of the products a company sells. Revenue is the income that a company generates from selling its products.

No, a higher cost of goods sold (COGS) is not necessarily better. In fact, a higher COGS typically indicates that a company is spending more money on producing or acquiring its products, which can lower its gross profit margin.