COGS: know every cent in your product cost
Your cost of goods sold is not just what the factory charges. The cents you forget are the cents that turn a "profitable" order into a quiet loss.
AI can build the full per-unit cost stack from your real invoices. You supply every figure: it must never invent a supplier price, a fee, or a freight number.
Fastest path: one prompt, end to end
🤖 AI prompt — paste into ChatGPT / Claude
You are a DTC cost accountant. Use MY numbers only (invent nothing).
Factory/supplier unit cost: [$]
Packaging per unit (box, insert, label, filler): [$]
Inbound freight for the shipment: [$] for [# units]
Payment/transaction fee %: [%]
Returns/damage allowance %: [%]
Average order value (AOV): [$]
Do this and show the arithmetic:
1. Inbound freight per unit = shipment freight / units.
2. Payment fee per order = AOV x fee %.
3. Returns allowance per unit = unit cost x returns %.
4. Total COGS per unit = supplier cost + packaging + freight/unit + fee/order + returns allowance.
5. List each line item as a $ and as a % of AOV, biggest first, and flag any single line over 10% of AOV.
If a number is missing, ask; do not guess. If you cannot reach a real figure, leave it blank and tell me which tool or invoice to pull it from.
Output: a line-item COGS table ($ and % of AOV) + total COGS per unit.
Or do it in 4 steps
- Start with the true unit cost, not the quoted price. The factory quote is only the floor. Add the MOQ-adjusted price you actually pay, plus any tooling or sample cost spread across the run.
- Add every physical thing that ships with the product. Box, mailer, insert card, label, tissue, filler. These are real per-unit costs and are the single most-forgotten line.
- Allocate inbound freight and fees per unit. Divide the shipment's freight by the units in it. Then add the payment/transaction fee (a % of every order) and a returns/damage allowance (a % that matches your real return rate).
- Total it and find where the cents hide. Sum the lines and show each as a % of AOV. Hidden costs cluster in packaging, per-order payment fees, and unallocated freight. Those are the three lines founders leave out, then wonder where the margin went.
Worked example (labeled): Supplier unit $12, packaging $1.50, inbound freight $600 / 500 units = $1.20/unit, payment fee 3% of a $45 AOV = $1.35, returns allowance 4% of $12 = $0.48.
Total COGS per unit = 12 + 1.50 + 1.20 + 1.35 + 0.48 = $16.53. So the "$12 product" really costs $16.53 to deliver, a 38% jump from the quote. Run your own invoices.
New to the numbers? Start with unit-economics-101 in Getting Started, then bring your true COGS into contribution-margin to see what each order really leaves you.