How To Calculate Cost Of Goods
In this 5-minute class, you’ll learn how to calculate cost of goods for the various products in your small business.
Recommended Pre-Requisites: None
Instructor: Jennifer Croft
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” expenses – 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, what to do if your cost of goods goes up, and how to lower your cost of goods.
The following worksheets or “cheat sheets” will be helpful to use:
•Cost Of Goods Forecast For 1 Year (worksheet)
•Breakeven By Gross Profit (cheat sheet)
•Breakeven By Gross Profit % (cheat sheet)
After 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 their average cost of goods.
•Consider implementing a price increase on some or all of your products.