Pricing strategies and the cost of goods sold
Your prices can influence the number of sales you make and the profit you earn on each transaction. We look at some pricing strategies to help find a balance between the two.
The first rule of price setting
You need to get more money out of a sale than you put into it. Which means you need to know the cost of the goods sold (also known as cost of sales).
What is cost of goods sold (or services sold)?
Cost of goods sold, or COGS, tells you what your business spends to deliver a product or service to your customer. It’s treated differently to general costs like rent or employee wages.
Identifying what COGS is in your business
Look for expenses that:
You can get a good idea of your COGS by performing this calculation: