Cost of goods sold (COGS) is the direct cost of the products you actually sold in a period — the materials, labor, and directly attributable overhead that went into them. It is one of the most important numbers in any maker business because it sits between revenue and profit: revenue minus COGS is your gross profit, and if you do not know your COGS you do not really know whether you are making money.
COGS is not the same as the cost of everything you bought. A jar of fragrance oil you purchased but have not used yet is inventory, not COGS — it only becomes COGS when it leaves as part of a sold product. This timing distinction is exactly what trips up sellers who try to track profit straight from their bank statement.
In Ardent Seller, COGS is built up from the bottom: purchases set ingredient costs, recipes total those costs into a per-unit product cost, and production runs and sales move that cost into COGS as goods are made and sold. Because it is calculated from your real data, COGS stays accurate as ingredient prices drift over time.
Related terms
Recipe
A defined set of ingredients, quantities, steps, and equipment needed to produce a finished good. Recipes automatically calculate production costs based on current ingredient prices.
Inventory Valuation
The total monetary value of all inventory currently in stock, calculated based on purchase costs. A key report for understanding the assets held in your business.
Production Run
A recorded instance of producing goods using a recipe. Deducts ingredients from inventory, adds finished goods to stock, and tracks batch/lot numbers for traceability.
Schedule C
An IRS tax form (Schedule C - Profit or Loss from Business) used by sole proprietors. Ardent Seller can categorize expenses and generate reports aligned with Schedule C line items.