When assessing the efficiency of traffic acquisition channels within the unit economics model, we often face the ne to correctly . Calculate the margin from the attract user flow. This indicator helps us to find out the margin receiv from each buyer (paying user) and each attract user. To correctly assess the marginality of the attract customer flow, we ne to correctly calculate COGS. When we subtract COGS from revenue, we get the. Gross Profit” indicator (or “. Gross Revenue”), which will later be ne to calculate the income per user.
What is COGS?
The English abbreviation COGS comes from the abbreviation of the indicator “Cost Of Goods Sold” and reflects the cost of goods sold or services render.
What should be taken into account when calculating COGS?
The cost price includes both fix and variable costs. The decision whether to include fix costs associat with production (provision of services) in COGS specific database by industry or not depends on the cost accounting method adopt in the company. But this is no longer the responsibility of the marketing department. In an ideal world, accurate COGS data is provid by the finance department or accounting.
How to avoid mistakes when taking into account expenses in COGS?
For marketing purposes, in order to avoid confusion and ultimately calculate the gross profit correctly (to assess the effectiveness of marketing activities), it is advisable to be guid by the answer to the question when assigning costs to COGS: “Would the company have incurr the costs includ in COGS if it had not provid this product or service to the client?”
If the answer is yes, then do not include these costs in COGS, they should be attribut to the fix costs of the enterprise, and if the answer is no, taiwan data these costs would not exist – then you are dealing with COGS.
Example of cost accounting in COGS.
For example, for the production of hosiery, yarn was purchas that was us on the company’s long-standing machines.
Which of the list enterprise expenses should be classifi as COGS?
The COGS will definitely include expenses for yarn, packaging (all the list types), but the salary of the cleaner, utility costs and depreciation of what happens when your email domain is blacklisted? the machines will not be taken into account in the COGS, since the company bears these expenses even in cases where it does not produce hosiery.
How to record COGS when calculating unit economics?
COGS can be taken into account in unit economics both as a percentage of the product price or average bill, and in absolute values (in rubles).
If the retail. Price of the product sold . Differs depending on the distribution channel. It is advisable to calculate . COGS in money (since using a . Percentage you can get incorrect data with different selling prices).