The Ultimate Guide to WooCommerce Cost of Goods (COGS): Track Profits Like a Pro
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Tracking the Cost of Goods (COGS) is a crucial step for WooCommerce store owners who want to understand their true profitability and drive sustainable growth.
Essentially, without any sort of profit tracking system, owners are running blind to obvious areas of opportunity in terms of driving further profits and cutting costs.
Many WooCommerce businesses struggle to determine accurate profit margins either because it’s too involved of a process, requires manual effort or they’ve overlooked hidden cost elements.
For example, our plugin Alpha Insights is a fully fledged & automated cost of goods plugin which also includes tracking for payment gateway costs, shipping costs and additional store expenses and overheads (optionally) – as well as a suite of other features & data including traffic analysis & ad account integration.
Anyway, enough of the shameless plug, In this comprehensive guide, we’ll explain what COGS is, why it matters and how you can easily track it using WooCommerce.
We’ll also introduce to the few absolute best WooCommerce Cost of Goods Plugins, their features as well as the obvious standout.
What is WooCommerce Cost of Goods (COGS)?
Cost of Goods Sold (COGS) refers to the direct costs associated with producing or purchasing the products you sell in your WooCommerce store. It includes expenses like:
- Product purchase cost
- Shipping fees
- Packaging costs
- Payment Gateway Fees
- Labor costs (if applicable)
Accurately tracking COGS allows you to calculate your gross profit, which is a key metric for understanding the financial health of your business.
Example Calculation
Let’s say you sell a product for $100, and the COGS is $40. Your gross profit would be:
Gross Profit = Selling Price – COGS
Gross Profit = $100 – $40 = $60
By tracking COGS, you can identify how much profit you’re actually making per sale on a given product.
Side note: Alpha Insights has the capacity to track all of the costs above automatically, without any additional intervention on your part and include the relevant tax calculations as well.
Why Tracking Cost of Goods is Essential for Your WooCommerce Store
Many WooCommerce store owners overlook the importance of COGS. Here’s why you should care:
Improved Profit Analysis
Without tracking COGS, you may think your store is more profitable than it actually is. Factoring in the costs gives you a clearer picture of your net profit.
Better Inventory Management
Knowing the cost of your products helps you price items effectively and manage inventory better. You can identify which products are most profitable and focus your marketing efforts on them.
Informed Decision-Making
Tracking COGS helps in making data-driven decisions for your store. For example, if certain products have high COGS and low profit margins, you may want to discontinue them.
Effective Sales Strategies
There’s a million different sales techniques that you could use to drive sales including buy x get y, value add offers, 1 in x gets y, straight up discount by % or $ and many more.
With accurate cost tracking, you can get an estimate of the money that is landing in your bank account, after everything is said and done. Whilst a particular tactic may drive sales, it’s the amount of money landing in your bank account that would determine the best sales tactic.
Meeting Legal Reqiurements
If you’re running a large scale business, you will have mandatory reporting requirements as part of your business structure. Using a cost of goods plugin allows you to accuratley report on the correct data, whilst reducing the amount of time it takes to close the books.
Reduce Time Spent On Admin Tasks
As per above, some people are legally required to report on their earnings.
If not, no doubt you want to be able to capture an accurate picture of your store’s current profitability, both at a store level & a product level.
Using a WooCommerce Cost of Good plugin is the perfect way to reduce the time it takes to calculate the profitability of your store.
The 3 Best WooCommerce Cost Of Goods Plugins
1. Alpha Insights – The Best Overall WooCommerce COGS Plugin
Alpha Insights leads the market with its robust set of features aimed at making profit analysis and COG tracking straightforward for WooCommerce stores. The plugin is designed for businesses of all sizes and provides deep insights into financial metrics, helping store owners make data-driven decisions.
Key Features:
- Automated Cost Tracking: Alpha Insights simplifies the process by automatically calculating COG based on purchase data as well as automatically capture payment gateway costs, shipping costs & custom costs.
- Profit & Loss Reports: Detailed reports give you a clear view of your store’s profitability, including margins, order-specific profits, and overall financial health.
- Ad Account Integration: Alpha Insights includes integratin for Google Ads & Meta Ads, which allows you to assess the actual profitability of campaigns as well as automatically store the ad spend data for store profit calculation.
- Seamless Integration: The plugin integrates smoothly with WooCommerce and other popular extensions, ensuring compatibility without manual adjustments.
- Background Processing: Handles complex calculations in the background without affecting site performance.
- Custom Data Import/Export: Easily import or export COG data using CSV files, which is useful for larger stores with extensive product catalogs.
- Dozens Of Reports & Dashboards: Alpha Insights is by far the most comprehensive solution for profit tracking, cost of goods is one element, Alpha Insights provides dozens of reports based on your entire store’s performance as well as products, customers, coupons, traffic & much more.
- Expense Management: Alpha Insights also includes an expense management system, which allows you to track expenses outside of your product cost of goods so that you can get an entire store profitability report with all things accounted for.
- Multi Currency Support: Alpha Insights automatically converts all relevant currencies based on your store currencies so that your reporting is presented in one set of easy to understand numbers.
- Data Exports: All data calculated and stored by Alpha Insights can be easily exported to CSV.
Pros:
- Provides in-depth financial analytics and historical profit reporting.
- Automated COG calculations, saving time and reducing errors.
- Excellent support, with updates tailored to customer feedback.
- Intuitive user interface tailored for non-technical users.
- The largest suite of features available in any cost of goods plugin.
- Ad account integration.
- Fully integrated expense management system.
- Export all data.
Cons:
- Requires a low cost subscription, which may be a barrier for smaller businesses.
- With so many features available, this could be considered as a plugin solution for advanced users
Alpha Insights is perfect for WooCommerce store owners who want a comprehensive COG solution that offers powerful reporting without slowing down their site.
Read more about Alpha Insights.
2. Cost of Goods for WooCommerce by SkyVerge
SkyVerge’s Cost of Goods for WooCommerce plugin is a strong contender, known for its solid integration with WooCommerce’s native reporting tools. It caters well to stores focused on streamlined COG tracking.
Key Features:
- Product-Level COG Tracking: Add COG to each product manually or via bulk import.
- Detailed Profit Reports: Integrates with WooCommerce’s built-in reports, giving a clear view of profits across orders and products.
- Customizable Cost Settings: Offers flexibility in defining COG for variable products and product bundles.
- Support for Multi-Currency Stores: Automatically adjusts COG based on the selected currency.
Pros:
- Easy to set up, making it beginner-friendly.
- Excellent integration with WooCommerce’s standard reporting, offering consistent data analysis.
- Multi-currency support makes it suitable for international stores.
Cons:
- Limited advanced analytics compared to plugins like Alpha Insights.
- Can become cumbersome for stores with large product catalogs due to manual entry requirements.
- The lack of automation for COG calculation may lead to potential errors if not managed carefully.
SkyVerge’s plugin is an excellent choice for small to medium-sized businesses looking for a cost-effective solution with solid WooCommerce integration, but it may not meet the needs of larger, data-driven stores & those who want a full suite of analytics.
Read more about Cost of Goods for WooCommerce by SkyVerge here.
3. WPFactory’s Cost & Profit Calculator for WooCommerce
WPFactory’s Cost of Goods Sold (COGS): Cost & Profit Calculator for WooCommerce is a feature-rich plugin designed for users who need detailed COG tracking and reporting capabilities. It stands out for its extensive customization options.
Key Features:
- Advanced Bulk Editing: Allows users to adjust product costs, prices, and stock levels in bulk, streamlining the process for larger stores.
- Customizable Reports: Generates detailed reports on product costs, profits, and stock valuation.
- Smooth Import/Export Functionality: Supports CSV import/export for easy data migration and updates.
- Enhanced Admin Interface: Adds sortable columns to the WooCommerce admin panel for quick access to cost and profit data.
Pros:
- Highly customizable, with options for advanced users who want to tailor the plugin’s features.
- Comprehensive reporting features provide deep insights into profitability.
- Great support and regular updates ensure ongoing compatibility with WooCommerce.
Cons:
- Some users report issues with compatibility, especially with certain currency formats and third-party plugins.
- The free version lacks critical features like advanced analytics and retroactive COG updates.
- Complex setup process may not be ideal for beginners.
WPFactory’s plugin is ideal for users who need a highly flexible and detailed solution but may require a bit more technical knowledge to fully leverage its capabilities.
Read more about cost of goods by WP Factory here.
Conclusion
| Plugin | Best For | Key Features | Pros | Cons | Pricing |
|---|
| Alpha Insights | Comprehensive COG analysis and reporting | Automated COG tracking, profit reports, expense management, ad account integration | Powerful reporting, user-friendly, runs automatically | Can be too advanced for some users | Free Trial. Annually $99/year, or $19/month |
| Cost of Goods by SkyVerge | Beginner-friendly, small to medium stores | Product-level COG, profit reporting, multi-currency support | Easy setup, great integration with WooCommerce | Limited advanced analytics | Priced at $79/year for a single site license |
| WPFactory’s COGS Calculator | Advanced users, large stores | Bulk editing, detailed reports, import/export, admin enhancements | Highly customizable, in-depth financial insights | Steeper learning curve, occasional compatibility issues | Free version available; Premium starts at $49/year |
Overall, Alpha Insights stands out as the best WooCommerce COG plugin due to its comprehensive feature set and strong focus on automation and reporting, which help store owners maximize profitability without added complexity.
If you need a simpler, more affordable option, SkyVerge’s solution is worth considering. Meanwhile, WPFactory offers a high degree of customization for advanced users who need extensive reporting capabilities.
How to Set Up WooCommerce Cost of Goods Manually
If you want to track COGS manually in WooCommerce, you can follow these steps:
- Enable Cost of Goods Field: WooCommerce doesn’t have a built-in COGS field, so you’ll need to add it manually or use a code snippet.
- Add COGS to Product Data:
- Go to Products > Edit Product in your WooCommerce dashboard.
- In the product data section, add a custom field for “Cost of Goods.”
- Enter the cost amount for each product.
- Calculate Gross Profit: After entering the COGS for all products, manually calculate the gross profit by subtracting the COGS from the total sales or setup another snippet to calculate the profit per product.
Challenges of Manual Setup
- Time-consuming for large inventories
- High risk of errors
- Doesn’t account for variable costs like shipping or packaging
- Won’t show you the total store performance, will only show you the per product performance unless you’re a hard core web developer and happy to program the whole lot.
Limitations of WooCommerce's Default Cost of Goods Setup
While manually adding COGS is possible, it’s not scalable for most businesses. Here are the common issues you might face:
Lack of Automation
Manually updating COGS for hundreds or thousands of products is inefficient and prone to human error.
No Centralized Reporting
WooCommerce’s default setup doesn’t provide a centralized report for COGS, making it difficult to analyze profitability across your entire store.
No Integration with Other Costs
You can’t easily factor in additional expenses like shipping, packaging, or transaction fees without complex calculations.
Solution: Use a plugin like Alpha Insights to automate COGS tracking and simplify profit reporting.
Common Mistakes When Tracking Cost of Goods
Mistake #1: Ignoring Variable Costs
Many store owners only account for the purchase cost of products. Make sure to include shipping, packaging, and transaction fees.
Mistake #2: Using Outdated Cost Data
Ensure that you regularly update your COGS data to reflect changes in supplier pricing.
Mistake #3: Not Using a Plugin
Manually tracking COGS can lead to inaccuracies and missed opportunities. Use a dedicated plugin like Alpha Insights for accurate and automated tracking.
Frequently Asked Questions
Q: Can I track Cost of Goods without a plugin in WooCommerce?
Yes, but it involves manual entry and calculations, which can be time-consuming and prone to error.
Q: How does Alpha Insights calculate COGS?
Alpha Insights automatically pulls data from your WooCommerce products and applies any additional costs you configure, like shipping or packaging.
Q: Is Alpha Insights compatible with other WooCommerce extensions?
Yes, Alpha Insights integrates seamlessly with popular WooCommerce extensions, ensuring accurate profit tracking across your store.
Conclusion: Alpha Insights Is The Best Value WooCommerce Cost Of Goods Plugin
Tracking your WooCommerce Cost of Goods is essential for understanding your store’s true profitability.
While manual methods can work for small stores, using a dedicated plugin like Alpha Insights simplifies the process, automates calculations, and provides detailed reports.
By leveraging Alpha Insights, you can make better business decisions, optimize your pricing strategy, and ultimately increase your profit margins.
Ready to take your profit analysis to the next level? Get Started with Alpha Insights Today.
