How To Calculate Cost Of Goods
In this 5-minute small business class online, you will learn how to calculate cost of goods for the various products in your small business.
Recommended Pre-Requisite Classes: None
Instructor: Jennifer Croft
Please note: You may have to raise the volume on your computer or phone to be able to clearly hear the video.
In this 5-minute, online class, you’ll learn the definition of cost of goods (COG), and how to calculate cost of goods for each of the products in your small business. Small business owners often mix up “cost of goods” and “overhead/fixed” costs – you’ll learn the difference between these two broad categories of expenses. You’ll discover the easy formula for figuring the cost of goods percentage (COG %) for each product. You’ll also find out how to track your cost of goods from month to month, how to lower your cost of goods, and what to do if your cost of goods goes up.
Keep learning – sign up today for our free Small Business Tidbits newsletter (sent to you twice a month).
Related ClassesHere are other small business classes online that relate to How To Calculate Cost Of Goods:
•How To Calculate Gross Profit (GP)
•How To Calculate Breakeven
WorksheetsThe following small business worksheets will be helpful for you to use:
•Cost Of Goods (COG) Forecast – 1 year
•Breakeven – By Gross Profit $
•Breakeven – By Gross Profit %
Next StepsAfter taking this class, here are some good next steps you can take:
•Calculate the cost of goods for the top-selling products in your business (at least 5 products).
•Brainstorm ways to lower your cost of goods on some or all of your products.
•Try to negotiate lower prices from your current vendors.
•Get bids from 1-3 new vendors.
•Check with other small business owners in your industry to find out if your average cost of goods is similar to theirs.
•Consider implementing a price increase on some or all of your products.