What is Amazon Cost of Goods Sold And How is it Calculated?

Introduction to Amazon Cost of Goods Sold (COGS)

Understanding your Amazon Cost of Goods Sold (COGS) is crucial for running a successful business. COGS tells you how much it costs to produce or buy the products you sell on Amazon. By knowing this, you can manage your expenses better and make smarter decisions about your pricing and budget.

If your COGS is high, it could mean you’re paying too much for supplies or production. But with the right strategies, you can lower these costs and boost your profits without changing your sale prices.

This guide will show you how to calculate COGS, avoid common mistakes, and use this information to improve your financial results.

What is the Cost of Goods Sold on Amazon?

Cost of Goods Sold (COGS) on Amazon refers to the total cost of producing or purchasing the products you sell. It includes all expenses directly related to making or acquiring your inventory.

Components of COGS for Amazon Sellers

• Direct Costs:
  – Manufacturing and Purchase Costs
  – Shipping and Handling
  
  These are the expenses directly tied to making or buying your inventory, such as procurement, labor, and materials. For instance, if you sell electronics, direct costs would cover the price of the components and assembly labor.
  
• Indirect Costs:
  – Packaging and Labeling
  – Storage Fees and Warehousing
  
  These are additional expenses related to selling your products, such as fulfillment fees, storage fees, shipping costs, and taxes and duties. For example, if you sell clothing, your indirect costs might include Amazon’s FBA fees and shipping materials.

Subtracting COGS from your revenue helps determine your gross profit (revenue minus COGS) and net profit (revenue minus COGS and other operational expenses). This insight is crucial for understanding your true financial performance and making informed pricing and business decisions.

It’s important to note what COGS does not include. COGS does not cover operating expenses (OPEX) like utilities, payroll, office rent, and accounting fees. However, your OPEX might encompass some direct COGS and ongoing costs related to running your business.

In short, COGS helps you understand how much it costs you to get your products ready for sale. Knowing this number is essential for setting the right prices and managing your profits effectively.

6 Key Reasons Why Understanding COGS is Essential for Amazon Sellers

Understanding and managing Cost of Goods Sold (COGS) is crucial for Amazon sellers for several key reasons:

1. Accurate Profit Measurement

COGS helps you determine the true cost of producing or purchasing your products. By subtracting COGS from your revenue, you can calculate your gross profit. This is essential for assessing how much profit you’re making on each sale and for ensuring that your business remains profitable. Without a clear grasp of COGS, you might overestimate your profits or miss out on critical insights into your financial health.

2. Pricing Strategy and Competitiveness

Knowing your COGS allows you to set prices that cover your costs and deliver desired profit margins. If you’re aware of how much it costs to produce or buy your products, you can price them strategically to stay competitive while ensuring profitability. Accurate COGS data helps you avoid pricing too high, which could deter customers, or too low, which could erode your margins.

3. Budgeting and Financial Planning

Tracking COGS helps in budgeting and financial planning. By understanding your costs, you can make informed decisions about where to allocate resources, adjust your budget, and plan for future expenses. This insight is vital for managing cash flow, forecasting future profits, and making strategic investments in your business.

4. Identifying Cost-Saving Opportunities

Regularly analyzing your COGS can reveal areas where you might reduce expenses. For instance, if you notice a significant increase in material costs, you might seek alternative suppliers or negotiate better terms. Lowering your COGS through such adjustments can directly enhance your profit margins.

5. Inventory Management

COGS plays a role in efficient inventory management. By understanding the cost associated with each item, you can make better decisions about how much inventory to hold, when to reorder, and how to manage stock levels. Effective inventory management helps prevent overstocking or stockouts, both of which can impact your profitability.

6. Performance Metrics and Reporting

For Amazon sellers, COGS is a critical metric for performance reporting. It impacts key financial ratios and metrics, such as gross margin and profitability ratios, which are important for evaluating business performance. Accurate COGS data supports better financial reporting and analysis, making it easier to track progress and identify trends.

Understanding the COGS Formula

To effectively manage your Amazon business, it’s crucial to understand how to calculate Cost of Goods Sold (COGS). This section will break down the COGS formula, provide a step-by-step guide, and offer an example calculation to help you grasp how to apply these concepts to your own operations.

How to Calculate Amazon Cost of Goods Sold

Calculating COGS involves adding up all the direct costs associated with producing or purchasing your products. This typically includes the cost of materials, labor, and any other expenses directly tied to your inventory. The basic formula for COGS is:

COGS = Beginning Inventory + Purchases − Ending Inventory

• Beginning Inventory: The value of your inventory at the start of the period.
• Purchases: The total cost of new inventory bought during the period.
• Ending Inventory: The value of the inventory remaining at the end of the period.

Step-by-Step Guide to Calculating COGS

1. Determine Beginning Inventory: Find the value of your inventory at the start of the period you are analyzing. This is typically the ending inventory from the previous period.
2. Add Purchases: Calculate the total cost of new inventory purchased during the period. This includes the cost of goods bought from suppliers or produced.
3. Subtract Ending Inventory: At the end of the period, calculate the value of the inventory still on hand. This can be done using methods like physical counting or inventory tracking systems.
4. Apply the Formula: Use the COGS formula to calculate the total cost of goods sold.
5. Review and Adjust: Ensure accuracy by cross-checking your numbers and adjusting for any discrepancies or errors.

Example Calculation of Amazon COGS

Let’s put the formula into practice with a simple example. Suppose you’re an Amazon seller dealing in gadgets:

• Beginning Inventory: $2,000
• Purchases: $8,000 (cost of new gadgets bought during the period)
• Ending Inventory: $1,500 (value of gadgets still in stock at the end of the period)

Using the formula:

COGS = $2,000 + $8,000 − $1,500 = $8,500

This means that the cost of the gadgets sold during the period is $8,500. By understanding and calculating COGS correctly, you can better manage your pricing strategy and profitability.

Different Accounting Methods for Determining COGS

When calculating Cost of Goods Sold (COGS), the method you choose can significantly affect your financial statements and business decisions. Here’s an overview of the three main accounting methods for determining COGS:

FIFO (First In, First Out)

FIFO stands for “First In, First Out.” Under this method, the oldest inventory items are sold first. Essentially, the costs associated with the earliest purchased or produced items are used to calculate COGS.

How it Works:

1. Inventory Flow: The first items you buy or produce are the first ones you sell.
2. Cost Allocation: COGS is calculated based on the cost of these older inventory items.
3. Impact on Financials: In times of rising prices, FIFO usually results in lower COGS and higher profits because the older, cheaper costs are matched against current revenues.

Example: If you bought 100 units at $5 each and later bought another 100 units at $7 each, under FIFO, your COGS for selling 150 units would include 100 units at $5 each and 50 units at $7 each.

LIFO (Last In, First Out)

LIFO stands for “Last In, First Out.” With this method, the most recently purchased or produced inventory items are sold first. This means that the cost of the newest inventory is used to calculate COGS.

How it Works:

1. Inventory Flow: The last items you buy or produce are the first ones you sell.
2. Cost Allocation: COGS is based on the cost of the most recent inventory purchases.
3. Impact on Financials: In times of rising prices, LIFO usually results in higher COGS and lower profits because the newer, more expensive costs are matched against current revenues.

Example: If you purchased 100 units at $5 each and later 100 units at $7 each, under LIFO, your COGS for selling 150 units would include 100 units at $7 each and 50 units at $5 each.

Average Cost Method

The Average Cost Method calculates COGS based on the average cost of all inventory items available for sale during the period. This method smooths out price fluctuations by averaging the costs.

How it Works:

1. Cost Calculation: Compute the average cost of all inventory items.
2. COGS Calculation: Multiply the average cost by the number of units sold.
3. Impact on Financials: This method provides a middle ground, with COGS reflecting an average of all costs rather than just the most recent or oldest costs.

Example: If you bought 100 units at $5 each and 100 units at $7 each, the average cost would be:

For selling 150 units, the COGS would be 150 units at $6 each, totaling $900.

How COGS Affects Amazon Business Operations

Cost of Goods Sold (COGS) has a significant impact on various aspects of your Amazon business operations. Here’s how COGS influences your pricing strategies and inventory management:

Pricing Strategies and COGS

1. Setting Prices for Profitability: Understanding your COGS is essential for setting prices that ensure profitability. If you know how much it costs to produce or purchase each unit, you can set prices that cover these costs and provide a desired profit margin.

How to Use COGS for Pricing:

• Markup Pricing: Add a desired profit margin to your COGS to determine the selling price. For instance, if your COGS is $10 and you want a 50% profit margin, you would price the product at $15.
• Competitive Pricing: Compare your COGS with competitors’ prices. If your COGS is higher, you may need to adjust your pricing strategy to stay competitive, either by improving efficiency to reduce costs or by differentiating your product to justify a higher price.

Example: If your COGS for a product is $20 and you aim for a 40% profit margin, you would price the product at $33.33 ($20 / (1 – 0.40)). Accurate COGS calculation ensures that your prices cover costs and generate profit.

2. Dynamic Pricing Adjustments: Fluctuations in COGS due to changes in supplier prices or production costs may require adjustments to your pricing strategy. Regularly reviewing COGS helps you make timely pricing adjustments to maintain profitability.

Inventory Management and COGS Analysis

1. Efficient Inventory Control: COGS data helps in managing inventory levels effectively. By understanding the costs associated with different inventory items, you can make informed decisions about how much stock to hold and when to reorder.

How COGS Influences Inventory Management:

• Stock Levels: High COGS items may require careful inventory control to avoid overstocking, which ties up capital and increases holding costs.
• Reorder Points: Use COGS information to set appropriate reorder points and avoid stockouts or excess inventory. This helps in maintaining optimal stock levels and ensuring that you can meet customer demand without incurring unnecessary costs.

Example: If you know that your COGS for a product is high and it’s selling well, you might decide to order smaller quantities more frequently to keep inventory fresh and reduce holding costs.

2. Cost Optimization: Analyzing COGS can reveal opportunities to reduce costs and improve margins. For instance, if you find that certain products have high COGS due to expensive materials, you might explore cheaper alternatives or negotiate better terms with suppliers.

How to Optimize COGS:

• Supplier Negotiations: Seek better deals or bulk purchase discounts from suppliers to lower your COGS.
• Process Improvements: Improve production efficiency or reduce waste to cut down on costs.

Example: If you identify that shipping costs are a significant part of your COGS, you might negotiate with shipping carriers for better rates or explore more cost-effective shipping options.

Tools and Software for Calculating COGS

Calculating Cost of Goods Sold (COGS) accurately can be complex, but several tools and software solutions can simplify the process for Amazon sellers. Here’s a look at some popular options and how to integrate them with your Amazon seller account:

Popular COGS Calculation Tools

1. Accounting Software:

• QuickBooks: A widely used accounting tool that offers features for tracking expenses, managing inventory, and calculating COGS. It allows you to link transactions and monitor financial metrics easily.
• Xero: Another popular choice that provides comprehensive financial management, including inventory tracking and COGS calculation. It integrates with various e-commerce platforms for streamlined accounting.

2. Inventory Management Systems:

• SoStocked: Designed specifically for Amazon sellers, SoStocked helps manage inventory levels and calculates COGS by tracking purchases and stock movements. It also provides insights into inventory performance and costs.
• TradeGecko (now QuickBooks Commerce): This inventory management system helps track inventory costs, including COGS, and integrates with various e-commerce platforms for seamless financial management.

3. COGS Tracking Tools:

• A2X: Connects with your Amazon seller account to automatically import transactions and calculate COGS. It simplifies the reconciliation process and ensures accurate financial reporting.
• LinkMyBooks: This tool integrates with Amazon to pull transaction data and calculate COGS. It helps automate bookkeeping and ensures that COGS calculations are accurate and up-to-date.

Integrating COGS Software with Amazon Seller Accounts

1. Seamless Data Import: Many COGS calculation tools can directly integrate with your Amazon seller account. This integration allows for automatic data import, reducing manual data entry and minimizing errors.

Steps for Integration:

• Choose a Tool: Select a tool or software that supports integration with Amazon.
• Connect Accounts: Follow the tool’s instructions to connect your Amazon seller account with the software. This usually involves authorizing access to your Amazon data.
• Sync Data: Ensure that transaction data, sales reports, and inventory details are synced between Amazon and the COGS tool.

2. Automating COGS Calculations: Once integrated, these tools can automatically calculate COGS based on the imported data. They use the transaction details, including purchase costs and sales, to compute COGS accurately.

Benefits of Integration:

• Accuracy: Reduces the risk of errors in COGS calculation by automating data import and processing.
• Efficiency: Saves time by eliminating the need for manual data entry and calculations.
• Real-Time Insights: Provides up-to-date COGS data, allowing for timely adjustments to pricing and inventory management.

3. Generating Reports: Integrated COGS tools often offer reporting features that provide insights into your cost structure and profitability. You can generate detailed reports to analyze trends, compare performance, and make informed decisions.

Example: If you use QuickBooks and connect it to your Amazon seller account, you can automatically import sales data and calculate COGS based on the cost of goods sold. You can then generate financial reports to review your profit margins and overall financial performance.

COGS vs. Other Similar Terms

Understanding how Cost of Goods Sold (COGS) compares to other financial terms can help you better analyze your business expenses and profitability. Here’s a breakdown of how COGS differs from similar terms such as Cost of Sales, Inventory Costs, and Operating Expenses:

COGS vs. Cost of Sales

Cost of Sales:

• Definition: Often used interchangeably with COGS, Cost of Sales refers to the total cost incurred to make or acquire the goods sold by a business. It includes similar direct costs as COGS.
• Purpose: Measures the cost of producing or purchasing goods sold. The terms are generally synonymous in many contexts, though “Cost of Sales” might be more commonly used in some industries or financial reports.

Key Difference: In most cases, COGS and Cost of Sales mean the same thing and are used to calculate gross profit. However, the terminology may vary depending on the industry or accounting practices.

COGS vs. Inventory Costs

Inventory Costs:

• Definition: The total costs related to maintaining inventory, including purchase costs, storage, and handling fees. Inventory costs are broader and encompass more than just the cost of items sold.
• Purpose: To account for all costs associated with holding inventory, not just those incurred when items are sold. It includes costs such as warehousing, insurance, and spoilage.

Key Difference: COGS is concerned with the cost of goods that have been sold, while inventory costs cover the total expenses of holding and managing inventory, regardless of whether the items have been sold.

COGS vs. Operating Expenses

COGS (Cost of Goods Sold):

• Definition: The direct costs tied to producing or purchasing the products you sell. It is directly related to the production or procurement of inventory.
• Purpose: To calculate the cost associated with goods sold and to assess gross profit. It does not include expenses related to the general operation of the business.

Operating Expenses:

• Definition: Costs incurred in running the day-to-day operations of a business, including rent, utilities, salaries, and office supplies. These are not directly tied to the production or purchase of inventory.
• Purpose: To account for the costs of running the business outside of production or procurement. These expenses affect net profit but are separate from the costs of goods sold.

Key Difference: COGS focuses on the direct costs of producing or acquiring products for sale, while operating expenses cover the broader range of costs required to keep the business running. Operating expenses are subtracted from gross profit (revenue minus COGS) to calculate net profit.

What is the Ideal COGS to Revenue Ratio?

The COGS to Revenue Ratio is a key financial metric that helps you understand how much of your revenue is consumed by the cost of producing or purchasing your products. Here’s a breakdown of what this ratio means, industry benchmarks, and how to analyze it for business success:

Industry Benchmarks and Standards

1. Understanding the Ratio: The COGS to Revenue Ratio is calculated by dividing COGS by total revenue:

This ratio shows the percentage of revenue that is spent on producing or acquiring goods. A lower ratio indicates higher profitability, as less revenue is used to cover the costs of goods sold.

2. Industry Benchmarks:

• Retail and E-commerce: In retail and e-commerce, a typical COGS to Revenue Ratio ranges from 50% to 70%. This can vary based on the type of products sold, supply chain efficiency, and pricing strategies.
• Manufacturing: Manufacturing companies might have a higher ratio, often between 60% and 80%, due to significant production costs.
• Luxury Goods: Companies selling high-margin luxury goods may have a lower ratio, often below 50%, reflecting higher profitability on each sale.

Benchmarks can vary significantly depending on the industry, business model, and market conditions. Comparing your ratio with industry standards can help assess whether your costs are in line with industry expectations.

Analyzing COGS Ratios for Business Success

1. Assessing Profitability: A lower COGS to Revenue Ratio generally indicates better profitability. By tracking this ratio, you can evaluate how efficiently your business is converting revenue into profit. If your ratio is higher than industry standards, it may suggest that your costs are too high relative to your sales.

2. Identifying Cost Control Opportunities: Analyzing your ratio can help identify areas where you might reduce costs. For example:

• Supplier Costs: If your ratio is high, review your supplier contracts for potential cost savings or negotiate better terms.
• Production Efficiency: Examine your production processes for inefficiencies or waste that could be reduced.

3. Pricing Strategies: Understanding your COGS to Revenue Ratio can guide pricing decisions. If your ratio is higher than desired, you might need to increase prices, improve operational efficiencies, or find cheaper sources for materials to maintain or improve profitability.

4. Financial Planning and Forecasting: Regularly monitoring this ratio helps in financial planning and forecasting. It allows you to set realistic revenue targets and cost control measures. For instance, if you anticipate increased production costs, you can adjust your pricing or budget accordingly to maintain profitability.

5. Comparing with Competitors: Benchmarking your COGS to Revenue Ratio against competitors can provide insights into your relative performance. If your ratio is higher, you may need to explore strategies to align more closely with industry norms, such as optimizing your supply chain or improving cost management practices.

Example Analysis: If your revenue is $100,000 and your COGS is $60,000, your COGS to Revenue Ratio is 60%. If the industry average is 50%, this might indicate that your costs are higher than average. You may want to investigate cost-saving measures or pricing adjustments to improve your ratio.

Best Practices for Managing Cost of Goods Sold (COGS)

Managing and reducing Cost of Goods Sold (COGS) is crucial for improving profitability and maintaining a competitive edge. Here are some effective strategies and best practices for managing COGS, along with specific tactics to reduce high costs:

1. Regularly Review and Analyze Costs:

• Monitor Trends: Regularly track and review your COGS to identify trends and fluctuations. Analyzing these trends can help you spot inefficiencies or areas where costs are rising.
• Cost Breakdown: Break down COGS into its components (e.g., materials, labor, shipping) to identify which areas contribute most to your costs and where adjustments can be made.

2. Optimize Production Processes:

• Process Improvement: Streamline your production processes to reduce waste and increase efficiency. Implement lean manufacturing principles or other methodologies to enhance productivity.
• Quality Control: Maintain high quality standards to reduce the likelihood of returns or defects, which can increase costs.

3. Efficient Inventory Management:

• Inventory Turnover: Aim for a higher inventory turnover rate to reduce holding costs and minimize the risk of obsolescence.
• Just-in-Time (JIT) Inventory: Consider JIT inventory practices to reduce the amount of inventory you need to hold, which can lower storage costs.

4. Implement Technology Solutions:

• Inventory Management Software: Use software to track inventory levels, forecast demand, and manage orders efficiently. This can help reduce excess inventory and associated costs.
• Automated Accounting: Implement automated accounting systems to track COGS accurately and in real-time, helping you make informed financial decisions.

How to Reduce High Cost of Goods Sold

1. Supplier Negotiation Tactics:

• Negotiate Better Terms: Work with your suppliers to negotiate better pricing, payment terms, or discounts. Building strong relationships with suppliers can often lead to more favorable terms.
• Explore Alternative Suppliers: Regularly review your supplier base and consider alternative suppliers who may offer better prices or terms.
• Volume Discounts: Negotiate volume discounts based on larger order quantities to reduce per-unit costs.

2. Bulk Purchasing Benefits:

• Economies of Scale: Purchasing in bulk can lead to economies of scale, reducing the per-unit cost of materials. Calculate whether bulk purchasing aligns with your storage capacity and demand forecasts.
• Long-Term Contracts: Consider entering into long-term contracts with suppliers for bulk purchases to secure lower prices and stable supply.

3. Cost-Effective Materials and Components:

• Material Substitution: Explore the possibility of substituting more expensive materials with cost-effective alternatives that do not compromise product quality.
• Supplier Partnerships: Collaborate with suppliers to develop cost-effective materials or components that meet your quality standards.

4. Streamline Production and Shipping:

• Reduce Production Costs: Invest in more efficient production technologies or processes to lower production costs. Automation and modern equipment can enhance efficiency and reduce labor costs.
• Optimize Shipping: Review your shipping methods and logistics to find cost-saving opportunities. Consolidate shipments or negotiate better shipping rates with carriers.

5. Improve Forecasting and Demand Planning:

• Accurate Forecasting: Use accurate sales forecasting to align production and inventory levels with actual demand. This can help reduce overproduction and associated costs.
• Demand Planning: Implement demand planning tools to anticipate changes in demand and adjust your procurement and production strategies accordingly.

Example of Implementation: Suppose your COGS is high due to expensive raw materials. By negotiating with your supplier for a volume discount and exploring alternative suppliers, you could reduce your material costs. Additionally, by optimizing your production process to reduce waste and adopting inventory management software, you can further lower COGS and improve overall profitability.

Common Mistakes to Avoid in Calculating and Managing COGS

Calculating and managing Cost of Goods Sold (COGS) accurately can be challenging. Here are some common mistakes to avoid and issues to be aware of:

1. Overlooking Hidden Costs:

• Indirect Costs: Often, indirect costs related to production or procurement are overlooked. These can include shipping fees, warehousing costs, and handling charges that contribute to the overall COGS but are not always included in calculations.
• Miscellaneous Expenses: Small, recurring expenses (e.g., packaging materials, quality control costs) can add up. Ensure that all relevant costs are accounted for in your COGS calculation to get an accurate picture of your expenses.

2. Failing to Update COGS Regularly:

• Inaccurate Data: Using outdated cost information can lead to inaccurate COGS calculations. Regularly update your cost data to reflect changes in supplier prices, production costs, and other relevant factors.
• Periodic Reviews: Implement a routine for reviewing and adjusting your COGS calculations, especially when significant changes occur, such as price increases from suppliers or changes in production processes.

3. Incorrect Cost Allocation:

• Misallocation: Incorrectly allocating costs between different products or categories can distort your COGS. Ensure that costs are assigned accurately based on the actual usage or consumption related to each product.
• Overhead Costs: While COGS should include direct costs, some businesses mistakenly allocate overhead or indirect costs to COGS. Overhead costs should be separated and accounted for under operating expenses.

4. Not Accounting for Returns and Discounts:

• Returns: If you don’t account for product returns or refunds, your COGS can be inflated. Ensure that returns and associated costs are factored into your COGS calculations.
• Discounts: Discounts or rebates from suppliers can affect your COGS. Make sure these are accurately recorded and deducted from your total costs.

5. Inconsistent Record-Keeping:

• Documentation: Inconsistent or incomplete record-keeping can lead to inaccuracies in COGS calculations. Maintain thorough and up-to-date records of all costs related to production and procurement.

Strategies to Overcome Challenges

1. Implement Robust Accounting Practices:

• Detailed Tracking: Use detailed tracking systems to capture all costs related to your inventory and production processes. Implement accounting software to automate and ensure accuracy in cost tracking.
• Regular Audits: Conduct regular audits of your cost calculations and inventory records to identify and correct any discrepancies.

2. Use Accurate and Up-to-Date Data:

• Current Pricing: Ensure that you use current prices from suppliers and up-to-date information on production costs. Update your COGS calculations whenever there are changes in costs.
• Continuous Monitoring: Monitor cost fluctuations and adjust your COGS calculations as needed to reflect the latest data.

3. Separate Direct and Indirect Costs:

• Cost Categorization: Clearly separate direct costs (those directly associated with producing or purchasing goods) from indirect costs (overheads). This helps in accurately calculating COGS and understanding overall cost structure.

4. Account for Returns and Discounts:

• Adjustments: Regularly adjust your COGS calculations to account for returns and discounts. Ensure these adjustments are reflected in your financial reports to maintain accurate profitability metrics.

5. Maintain Consistent Records:

• Documentation Practices: Implement consistent and thorough documentation practices for all financial transactions related to inventory and production. This ensures accuracy and reliability in your COGS calculations.

Example: Suppose you frequently encounter discrepancies in your COGS due to overlooked shipping costs. By integrating a robust inventory management system that tracks all associated costs and ensures regular updates, you can avoid these issues and maintain more accurate COGS calculations.

Conclusion

Understanding and managing Cost of Goods Sold (COGS) is essential for Amazon sellers aiming to optimize profitability. We’ve covered the importance of accurate COGS calculations, various accounting methods, and how COGS impacts your business operations. We also discussed common challenges, such as overlooking hidden costs and failing to update COGS regularly, and provided strategies for effective management.

1. Regularly Review Costs: Continuously monitor and analyze your COGS to spot trends and address inefficiencies.
2. Optimize Processes: Streamline production and inventory management to reduce costs and improve efficiency.
3. Use Technology: Implement accounting and inventory management tools to automate and refine your cost calculations.
4. Negotiate and Plan: Work with suppliers for better terms and make informed decisions based on accurate, up-to-date data.

By following these best practices, you can better manage your COGS, enhance profitability, and achieve long-term success in your Amazon business.

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