![]() Chances are that you might have added more profit margin or less in comparison to your competitors in the market. Once you know the exact purchasing amount and thereafter deciding your profit margin is not an ideal strategy. Helps in comparing the market value of your product with your competitors.So knowing the amount you have spent in getting the products to be sold you can arrive at actual expenses by including other costs incurred in the overhead i.e. Your balance sheet needs to list all your expenditures and incomes. ![]() Now, this is more of an accounting thing but none the less it is important. Helps in determining the actual expenses in obtaining the products.Hence, knowing COGS helps you in determining how much profit margin you can keep on the products you sell. Once you know the amount in which you have purchased the product, you will be in a better position to judge the price at which you would like to sell the product so that you can not only cover your expenses but also earn profit from it. Here are some of the benefits of knowing Cost Of Goods Sold (COGS).įirstly, your selling price can be determined by knowing the total expense you have made in procuring the products. Therefore, it becomes an important part of his finances. A business person can earn profit only when he knows his exact expenses and incomes by selling his/her goods.Ĭost of Goods Sold gives the idea to a business person about his expenditure in procuring the material he wants to sell. The primary motive of starting any business is to earn a profit. Why is it important to know and calculate the Cost of Goods Sold? Cin7 Orderhive Login – For Cin7 Orderhive customers.Contact us – Get in touch with the team.Find Services Partners – We’re here to help.Compare product capabilities and integrations – See the differences and pick the best product for your business.
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