Let’s start right away with the most essential thing: the task of any business is to reduce the cost of goods. The lower the product cost, the higher the profitability in the final account. So, this is something to strive for. There are several ways to achieve this. But here’s where you need to start: you need to have precise data and reporting to see the situation. And to be able to compare one comparative period with another. Visual data on the dashboard presents all the information at a glance through pictures, numbers, and graphs. Check out Shopify sales dashboard for an easy understanding.
More than 2,000 Shopify stores are already using Mipler with positive results. Tracking KPIs is now much more accessible. A one-week free trial is also available, so you’re risk-free while getting to know the Shopify sales dashboard.
Detailed product reports will help you determine which products bring your business the best profits and which are the worst. Mipler has already developed the tool you need. You can get acquainted by going to the link Shopify sales report by product
A bit of theory.
Cost of Goods Sold (COGS) = wholesale prices of all goods + all direct and indirect costs in the specified period + the difference in the value of the balances in the warehouse at the beginning and end of the period.
The cost price is calculated according to the following formula:
COGS = Beginning Inventory + Purchases – Ending Inventory
Before calculating the cost of the product, you should answer the question
What is included and what is not included in the price?
Included in the cost price:
- Production/purchase of goods
- Logistics and customs expenses
- Product packaging
Not included in the cost price:
- Promotion and advertising
- Salary to employees
The following essential questions are: How do you record the moments of change in which programs to keep records, and how often? And here, you can’t do without a high-quality extension or application.
So why do you need to calculate the COGS?
- For pricing. Perhaps a price correction is needed so that you receive more profits and do not incur losses. Cost is the basis for determining product prices.
- To find out the profit. Calculating the cost price helps to determine whether your business is profitable or at a loss.
- For planning. You need a clear vision of how much money you must raise for purchases and other expenses.
Try not to make the following common mistakes in calculating the cost of goods
- As a store owner, you may not consider personal expenses. But for the cost price to be objective, cover all expenses, and bring profit, you should also consider personal expenses (for example, you paid for some product delivery or brought it in your car from the warehouse).
- Not all expenses are recorded. You may think you will remember everything, but it is not. So, some of the costs are then not considered when calculating COGS.
- Calculate the cost only once and do not do it again. The market changes dynamically, and technologies, material prices, and currency rates change. So, make it a rule to recalculate the cost of goods periodically.
- Only direct costs are considered, and indirect costs are not. Indirect costs may include product storage costs, administrative costs, salaries, and equipment depreciation costs.
Possible ways to reduce the cost of products
change suppliers who offer lower prices, increase your employees’ efficiency, and increase your business’s technical level. More modern equipment, software, and work-process automation will help achieve the desired results.
To calculate the cost of goods in Shopify, go to “Analytics” and find the “Report.” Add your product’s cost per unit, and in the report, you’ll see details about your prices, margin, and profit.
However, you’ll only be able to view COGS if you’re on a higher-paying Shopify plan.
The basic plan does not include the COGS review service.
With Mipler, this is not a problem because the company offers detailed reports for each type of product.
Shopify sales reports by product
With this tool, you can create a report with more options.
In addition to the standard report for a specific period, you will also be able to create:
- Variant Sales Report: You will be able to explore which variants are selling best or not selling at all.
- Sales report by collections: detailed sales information by product collections
- Sales Report by Vendor: The report is sorted by vendor, product, and variant
- Product Tag Sales Report: Displays sales data based on product tags. If you are interested in how a particular product is sold, enter the product tag and read the data.
Also, you can:
- View sales data every day.
- Study sales data by geographic distribution of buyers: track which provinces, countries, and cities you have the best or worst selling products.
- You can track the number of orders and refund data.
- Track gross and net sales for a selected period. The gross margin shows how much money the store keeps. The higher this indicator, the more funds you have left to pay other expenses. If the cost is too high, it can negatively affect the gross profit. So be sure to monitor this indicator.
With the help of COGS, you will get a clear view of your expenses and be able to plan your purchases for the following year. You can also review pricing and business strategy if necessary.
With this information and accurate product cost data, you can identify areas needing immediate improvement in your business. Early warnings prevent potential issues.