CMV is the acronym for Cost of Goods Sold, a business metric that serves to measure how much a company spends to be able to sell a product. It may include, for example, manufacturing, storage, transport, packaging, resale and even tax costs. You can definitely use it in your e-commerce.
HOW TO CALCULATE COGS
There are a few ways to calculate Cost of Goods Sold. For example, it is possible to do it by product or by billing. Next, I'll teach you the formula , which is the most basic way to perform the procedure. In this formula, EI stands for Opening Inventory; C is the acronym for Purchases Made in a Period and EF means Ending Stock.
So, let's say you own a perfume resale e-commerce and you purchased R$1.000,00 worth of perfume bottles from a supplier on the 1st of April. Soon after, around April 15th, he bought another R$500,00 in bottles. Already on April 30, his warehouse had only R$200,00 in stocked goods.
Applying the formula In this situation, R$1.000,00 + R$500,00 – R$200,00 is equal to R$1.300,00. Thus, your COGS in that month was R$1.300,00. This value represents how much you invested to sell the goods in the month.
IMPORTANCE
Knowing your e-commerce's Cost of Goods Sold (COGS) is fundamental for several reasons. This metric allows you to discover how much your company spends to sell a product. This helps you price that product correctly, avoiding losses. In this context, COGS is a metric as important as Return on Investment (ROI) and Return on Advertising Spend (ROAS).
In addition, CMV allows you to have a more comprehensive view of your business finances. It allows you to check how profitable your business is or is not. Based on it, you can make better decisions. Therefore, be sure to calculate the Cost of Goods Sold in your e-commerce. Follow this metric always!
As soon as you can, click on " More Profitable Business " and learn how to increase your e-commerce revenue!
