Manage Cost of Goods Sold in MerchantFlow to calculate accurate profit margins. Add COGS individually, in bulk, or sync from Shopify inventory data.

COGS Management

Cost of Goods Sold (COGS) tracking in MerchantFlow is the foundation for calculating accurate product-level profit margins. COGS represents the direct cost of producing or purchasing each product you sell, and without it, MerchantFlow cannot determine true profitability. You can add COGS individually, in bulk using percentage or flat-rate rules, or sync costs directly from Shopify inventory data.

What Is COGS?

Cost of Goods Sold is the direct cost associated with each product you sell:

Product manufacturing or wholesale cost
Shipping from supplier to your warehouse
Import duties and tariffs
Packaging materials

Why it matters: Without accurate COGS, you cannot calculate true profit. A product with $1,000 revenue might only generate $100 profit if COGS and ad spend are high.

How to Access COGS Management

Navigate to Dashboard > P&L > COGS to manage product costs.

Three tabs available:

All COGS - view and edit existing entries
Missing COGS - products without costs defined
Coverage - track how much of your catalog has COGS

Understanding COGS Coverage Metrics

The coverage report shows how well your COGS data covers your business:

Product Coverage: Percentage of products with COGS defined (e.g., 75 out of 100 products = 75%)
Unit Coverage: Percentage of sold units with COGS (e.g., 850 out of 1,000 units = 85%)
Revenue Coverage: Percentage of revenue with known COGS (e.g., $50,000 out of $60,000 = 83%)

Why revenue coverage matters: High-revenue products impact profitability calculations more. Focus on adding COGS to your best sellers first.

How to Add COGS

Method 1: Bulk Update (Recommended)

For multiple products at once:

Go to Dashboard > P&L > COGS
Click "Missing COGS" tab
Select products using checkboxes
Click "Mass Update" button
Choose update method (see below)
Enter value and reason
Click "Apply to X Products"

Method 2: Individual Entry

For single products:

Go to "All COGS" tab
Find the product in the table
Click the pencil icon to edit
Enter cost amount
Add a reason (e.g., "Updated from supplier invoice")
Click "Save"

Method 3: Sync from Shopify

If you use Shopify inventory tracking:

Go to Dashboard > P&L > COGS
Click "Sync from Shopify" button
MerchantFlow imports costs from Shopify inventory items
Review synced costs in "All COGS" tab

Requirements:

Shopify integration connected
Inventory tracking enabled in Shopify
Cost per item entered in Shopify admin

Bulk Update Methods Explained

Percentage of Price

Apply COGS as a percentage of the product's sale price.

Use when: You have consistent margins across products.

Example: All products cost 40% of retail price
A $100 product gets $40 COGS
A $50 product gets $20 COGS

Best for: Products from the same supplier or category with similar margin structures.

Flat Rate

Apply the same fixed cost to all selected products.

Use when: Products have similar costs regardless of price.

Example: All t-shirts cost $15 to produce
Both $30 and $50 t-shirts get $15 COGS

Best for: Products with standardized manufacturing costs.

Target Margin

Calculate COGS based on your desired profit margin.

Use when: You know what margin you want to achieve.

Example: Target 60% margin on all luxury items
A $100 product needs $40 COGS (100 x (1 - 0.60) = 40)

Formula: COGS = Price x (1 - Margin)

Best for: Premium products where you have strict margin requirements.

How Profit Is Calculated with COGS

Once COGS is added, MerchantFlow calculates:

Gross Profit:

Gross Profit = Revenue - COGS - Ad Spend

Profit Margin:

Profit Margin % = (Gross Profit / Revenue) x 100

Example:

Product sells for $100
COGS is $40
Ad spend is $15
Gross profit = $100 - $40 - $15 = $45
Profit margin = ($45 / $100) x 100 = 45%

Best Practices for COGS Management

1. Start with High-Revenue Products

Focus COGS entry on your top sellers first. These have the biggest impact on profit calculations. 20% of products typically generate 80% of revenue -- get accurate margins on these first.

2. Use Bulk Operations

Save time by grouping products with similar cost structures:

All products from Supplier A: 35% percentage rule
All t-shirts: $12 flat rate
All premium items: 65% target margin

3. Add Reasons to Every Entry

Always add a reason when creating or updating COGS for an audit trail:

"Q4 2025 supplier pricing"
"Updated from November invoice"
"Estimated cost for new product"

4. Review Coverage Regularly

Check your coverage metrics monthly. Targets:

Revenue coverage: above 90%
Unit coverage: above 80%
Product coverage: above 75%

5. Sync from Shopify Monthly

If using Shopify inventory tracking, sync regularly to catch supplier price changes.

Troubleshooting COGS Issues

Coverage shows 0% despite entries

Cause: No order data synced yet. Solution: Wait for the first order sync, or trigger a manual sync.

Bulk update does not work

Cause: Selected products are missing prices. Solution: Ensure all products have valid sale prices in your e-commerce platform.

Shopify sync returns "0 costs synced"

Cause: Shopify inventory items do not have costs entered. Solution:

Go to Shopify admin
Products > [Product Name] > Variants
Click "Edit" on variant
Enter "Cost per item"
Try sync again

Frequently Asked Questions

Do I need COGS for every product?

Not necessarily. Focus on products that drive your revenue. MerchantFlow's coverage metrics help you prioritize which products to add costs for first.

What if I do not know exact costs?

Use estimated costs as a starting point. Industry averages (40% for apparel, 50% for electronics), percentage-of-wholesale rules, or competitor research all provide reasonable estimates. You can refine later.

Can I import COGS via CSV?

Yes. MerchantFlow supports CSV bulk import for COGS data:

Prepare a CSV file with columns for SKU and cost per unit
Go to Dashboard > P&L > COGS
Click "Bulk Import"
Upload your CSV file
Review the mapped entries and confirm

MerchantFlow also supports BeProfit-compatible CSV format for merchants migrating from other tools. The import matches products by SKU and creates COGS entries automatically.

Does COGS include shipping to customers?

No. COGS is the cost to acquire or produce the product. Shipping to customers is a separate expense tracked in your operating expenses.

How often should I update COGS?

Update when supplier prices change, you switch suppliers, import duties change, or you renegotiate wholesale terms. Most businesses review COGS quarterly.

What if my Shopify sync does not bring any costs?

Verify that inventory tracking is enabled in Shopify, cost per item is entered in Shopify admin (Products > Inventory tab), and your MerchantFlow integration has proper permissions.

COGS Management - Product Cost Tracking