Incorporating Product Cost and Cost of Goods Sold (COGS)
Background
Product cost is a main component to derive your Cost of Goods Sold (COGS). Product cost is reported on the variant level which allows us to report on the customer, order, and product (line-item) levels of analysis.
We recommend inserting landed product cost which represents the blended cost of your product after customers and inbound shipping to your warehouse. This will allow you to understand product gross margins.
Steps
- Input your product costs within Shopify Product’s section
- Select a specific product
- Click on the desired variant
- Enter the
Cost per item
- Please let the Source Medium team know that you’ve inputted the costs and we’ll enable costs to be picked up automatically moving forward
Additional Information
A few other components that can be considered COGS including merchant processing fees, shipping cost and fulfillment costs. Source Medium is planning to incorporate these costs as a bigger initiative to get to Gross Margin. Reach out to our CSA team for more information on expected launch dates!
Whenever there are known changes to your product cost, you should update these costs within your Shopify. We built out a smart system to capture time changes in your product costs, so that any orders created after your change in costs will reflect the new values inputted (while historical values will be preserved based on the old inputs).
Within the LTV dashboard which uses the product cost slider, you may see your “Adjusted LTV” numbers change to incorporate your product costs in Shopify.
We are working on a solution, but don’t let that stop you from letting us know you are interested!
Product Costs can be surfaced on the Executive Summary, Lifetime Value & Retention, and Product Performance modules.
We plan to release additional functionality in the near future that will address product costs outside of Shopify.
Questions? Reach out on Slack or support@sourcemedium.com