Calculating Product Cost of Goods Sold (COGS) to fix hidden cash leakages

The Danger of Glossing Over Inventory Costs

Many e-commerce co-founders assume their business is profitable simply because they have a healthy bank balance. They buy products at ৳500 and sell them at ৳1200, believing they enjoy a ৳700 profit margin. This calculation is a major mistake because it neglects the **Cost of Goods Sold (COGS)**.

COGS represents the total, comprehensive cost to get a product ready for delivery. It includes sourcing value, package wrappers, manual printing, and returned freight penalties.

What Factors into Real COGS?

• Sourcing and Import Value: Sourcing value, freight forwarding, and local shipping costs.
• Packaging Elements: Custom cardboard boxes, bubbles wraps, poly envelopes, and thank-you cards.
• Return Adjustments: The cost to retrieve returned products from couriers. If a product returns damaged, the COGS of that specific sale is lost.