When most Shopify merchants think about costs, they think about what they pay their supplier. But true Cost of Goods Sold (COGS) is much more than that.
Sentiaify helps you understand and track the full cost of every product you sell.
What COGS Actually Includes
True COGS includes every cost directly tied to producing or acquiring the products you sell:
Direct Material Costs
The actual cost of the product from your supplier
Shipping to Your Warehouse
Freight in, customs, duties for international sourcing
Packaging Materials
Boxes, tape, bubble wrap, tissue paper, product inserts
Storage Costs
Warehouse fees, Amazon FBA storage fees, or allocated space costs
Quality Issues
Damaged goods, returns processing, and defective products
Why Simple COGS Is Dangerous
Many merchants use just their supplier cost as COGS. But this ignores significant expenses:
Example: Shopify store selling phone cases
True COGS per case: $5.15
If you're pricing based on $3.50 COGS with a 50% margin target:
You're getting 26.5% margin instead of your target 50%. That's a massive difference.
How Sentiaify Handles COGS
Sentiaify automatically calculates true COGS per product:
1. Base Product Cost
Your supplier cost per unit, entered in Settings
2. Inbound Shipping
Divided across units based on weight or quantity
3. Packaging Cost
Per-order packaging costs attributed to each product
4. Storage Allocation
Monthly storage costs distributed across products by volume or units
5. Return Reserve
Estimated cost of returns based on your return rate
Setting Up COGS in Sentiaify
Step 1: Enter Product Costs
Go to **Settings > Product Costs** and enter your supplier costs. You can:
Step 2: Configure Fulfillment Costs
Set your default costs for:
Step 3: Review Calculated COGS
Sentiaify shows you the true COGS for each product, broken down by cost type.
Identifying COGS Issues
Once set up, Sentiaify helps you spot problems:
Rising Supplier Costs
If your supplier raises prices, Sentiaify alerts you and shows the profit impact.
High Return Rates
Products with high return rates show inflated COGS. Consider improving quality or descriptions.
Heavy Products
Heavy products have higher shipping costs. You might need to adjust pricing.
Key Takeaways
1. True COGS includes all costs, not just product cost
2. Simple COGS calculations can be 30-50% off
3. Sentiaify automatically calculates true COGS per product
4. Enter accurate costs for the best profit data
5. Use COGS data to optimize pricing and product mix
Get accurate COGS tracking with Sentiaify. Start your free trial today.