What Is COGS?
What does COGS stand for?
Cost of Goods Sold
We buy a cookie for $0.50 and sell it for $2.
Calculate the profit.
$1.50
We buy cookies for $2.00 and sell them for $3.50. What is our profit?
$1.50
Profit equals Selling Price minus this.
COGS
Cost of goods sold
Selling a $2.50 snack for $3.00.
Is this high profit or low profit?
Low profit
This is what it costs us to buy or make the items we sell.
COGS- Cost of goods sold
We buy a box of takis for $35 and sell it for $50.
Calculate the profit.
$15.00
If we want to make a $10 profit on a hoodie that costs $25, how much should we sell this product for?
$35.00
If something costs $5, should we sell it for $5?
No
Selling a $2.50 chocolate bar for $4.00.
High profit or low?
High
Does COGS include decorations for the store?
No
We make $2 profit per water bottle.
We sell 100 bottles. What is the total profit?
$200
If profit per notebook is $1 and we want $200 total profit,we must sell this many notebooks.
200 Notebooks
Define high margin
More profit cushion
An item with a higher profit margin is generally less risky for the school store than an item with a low profit margin.
True or False
True
You make more money per sale
If a few items don’t sell, you’re less likely to lose money
It helps cover unexpected costs (like shipping increases)
Name TWO things included in COGS.
Any 2: Supplier cost, shipping, packaging
An ice cream bar costs $4. Selling price is $5. What is the profit per ice cream bar?
$1.00
If we lower prices too much to “sell more,” what are we messing up?
The profit
Define low margin
Less profit
If we don’t know our COGS, what might happen?
We think we’re making money but aren’t
You price an item at $10.
Your COGS is $9.25.
Is this high margin or low margin?
Low Margin
Profit is $4 on a $8 item.
What is the percentage of profit?
50%
Why do smart businesses calculate instead of guess?
To make informed decisions and stay profitable
Why is knowing COGS important?
It helps us price correctly and avoid losing money
If we price our items too low, what are we doing?
Losing money or barely breaking even.