Cost of Goods Sold (COGS) is the cost of the product or service you sell, minus any discounts or returns.
For example, if you sell a product for $100 and you give a 10% discount, your COGS is $90.
COGS is calculated by dividing the cost of your product or service by the number of units sold.
For example, if you sell 100 units of a product for $90 each, your COGS is $9 per unit.
COGS is a very important metric because it is a direct reflection of your company's gross profit. The higher your COGS, the lower your gross profit.
The lower your COGS, the higher your gross profit.
The higher your gross profit, the more money you have left over to spend on marketing, research and development, and other important aspects of your business.
It can be difficult to calculate Cost of Goods Sold as % of Sales directly inside of Xero; that's where Causal comes in.
Causal is a modelling tool which lets you build models on top of your Xero data. You simply connect Causal to your Xero account, and then you can build formulae in Causal to calculate your Cost of Goods Sold as % of Sales.
Causal lets you build models effortlessly and share them with interactive, visual dashboards that everyone will understand.
In Causal, you build your models out of variables, which you can then link together in simple plain-English formulae to calculate metrics like Cost of Goods Sold as % of Sales. This makes your models easy to understand and quick to build, so you can spend minutes, not days, on your models.
When you're done, you can share the link to your model with stakeholders. They'll be able to view your model's outputs in a visual dashboard, rather than a jumble of tabs and complex formulae. The dashboards are interactive, letting viewers tweak your assumptions to see how they affect the model's outputs.
Causal lets you add visuals in a single click, letting you plot out graphs and distributions for metrics like Cost of Goods Sold as % of Sales.