For a D2C brand, COGS is usually the landed cost per unit multiplied by units sold. It excludes the costs of selling and delivering, such as shipping to customers, payment fees and marketing, which sit below gross margin in a contribution P&L.
Keep cost per unit up to date in your store. A stale cost that is 15% too low quietly inflates every margin and break-even ROAS calculation built on it.
Formula
COGS = Units sold × Landed cost per unit
Example
1,200 units at a landed cost of ₹310 is COGS of ₹3,72,000.
Margin from cost and price, or the price you need for a target margin, with tax handled properly.
Related terms
- Gross marginGross margin is the share of the selling price left after the direct cost of the…
- MarkupMarkup is the amount added to the cost of a product to set its price, expressed as…
- Contribution margin (CM1, CM2, CM3)Contribution margin is the revenue left from a sale after the variable costs of…
Where this comes up
ROAS is not a business metricReturn on ad spend tells you how the platform sees your campaigns. Contribution margin tells you whether the business is better off. Here is how to run paid media on the second.Part of the growth marketing glossary by Shiva Sharma.