Cost of goods plugin for WooCommerce

If your WooCommerce business rely on inventory model or you are the manufacturer of products being sold on your store, then it’s vital to track Cost of Goods Sold (COGS) for your business.

Cost of Goods Sold is basically your unit cost (purchase price) or manufacturing cost for an item. If your WooCommerce business is a dropshipping model, you can also add your purchase price as unit cost, so it gets counted as COGS.

COGS is often to be confused with inventory cost, which is reflected when an item is added to inventory, whereas COGS is reflected when an item is sold. In this way, you can measure your profit margin based on your sale price for the specific sale.

Importance of COGS plugin

COGS is the base cost of your sales operation. Therefore it’s major factor to be considered while determining sale price of an item. While determining the sale prices following equation can be taken into consideration

Sale price = COGS + Expenses + Tax + Profit Margin 

How to Track COGS in WooCommerce?

To track COGS in WooCommerce, store owners would need to add related plugins in their site. There are several COGS plugins available, which are listed for the remainder of the article.

Finpose

Finpose is an accounting plugin for WooCommerce. It has 8 modules including such as inventory, expenses, reports. Inventory module also includes fully featured COGS tracking to enable store owners track their COGS accurately.

Unit Level Cost of Goods Tracking

FIFO Model

While most plugins track COGS as a static value, unit costs is dynamic and can change over time. For example you may add 5 new units to your inventory this month at $1 and next month 5 more units at $1.2. In this case your COGS should not change before all 5 previous items gets sold. Finpose solves this issue by implementing FIFO (first in first out) model in it’s inventory management. This way all COGS data can be accurately tracked.

Profit Margins

Finpose calculates and reflects Gross Profit Margins for each product, based on your unit costs and displays it on inventory page. So store owners would know how profitable are they for each sale, excluding other expenses, tax...etc.

COGS reporting

Finpose provides quick COGS summary on dashboard, in addition to COGS totals for each month on Profit Loss report.