\u201cCost of goods\u201d is comprised of the following components: Tip #2\u00a0\u2013<\/strong>\u00a0Set a Realistic COGS Goal for the Business<\/strong> If your business has to compete in a price-sensitive market where you have a lot of competition, you most likely will have to maintain lower profit margins to remain competitive. Having a good understanding of your COGS and how you can make adjustments is critical here. Your goal number is somewhere between\u00a025% and 35% depending on your other expenses and order volumes.<\/p>\n If your business has less competition, and your market can support a higher retail price model, then you have a bit more wiggle room. Keep this thought in mind though \u2014 1% either way can mean thousands of dollars depending on the size of your business.<\/p>\n Tip #3 \u2013 Look at\u00a0COGS from Every <\/strong>Angle<\/b> Consider buying at higher volumes if your sales can support the additional costs ahead of the potential incoming sales. Or look at\u00a0adjusting your delivery time to potentially\u00a0decrease labor costs without negatively affecting the customer experience. Perhaps you should revise\u00a0your current discount strategy to\u00a0allow for\u00a0more\u00a0profit at the end of the sale.<\/p>\n Lastly, don\u2019t forget to add in additional advertising, commission and operating expenses to get to\u00a0the true cost of the sale. You may find that certain items won\u2019t work in certain advertising channels as the \u201ccost\u201d of the sale exceeds the actual sale. Test different advertising channels to find the one that works best for your business.<\/p>\n I hope this information helps you be more aware of your COGS\u00a0so that you can make smarter business decisions in the future.<\/p>\n What\u2019s your game-changing plan to move your business to the next level? Please share your advice in the comments below, on our Facebook<\/a> or Google+<\/a> walls or tweet<\/a> us. Or, feel free to reach out to me directly with any questions or comments at cberrier@123print.com<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":" Today\u2019s topic deals with the Operational side of the business for all of you\u00a0current and […]<\/p>\n","protected":false},"author":15,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4,1458,8],"tags":[1890],"_links":{"self":[{"href":"https:\/\/blog.123print.com\/blog\/wp-json\/wp\/v2\/posts\/8572"}],"collection":[{"href":"https:\/\/blog.123print.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.123print.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.123print.com\/blog\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.123print.com\/blog\/wp-json\/wp\/v2\/comments?post=8572"}],"version-history":[{"count":12,"href":"https:\/\/blog.123print.com\/blog\/wp-json\/wp\/v2\/posts\/8572\/revisions"}],"predecessor-version":[{"id":9048,"href":"https:\/\/blog.123print.com\/blog\/wp-json\/wp\/v2\/posts\/8572\/revisions\/9048"}],"wp:attachment":[{"href":"https:\/\/blog.123print.com\/blog\/wp-json\/wp\/v2\/media?parent=8572"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.123print.com\/blog\/wp-json\/wp\/v2\/categories?post=8572"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.123print.com\/blog\/wp-json\/wp\/v2\/tags?post=8572"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"Calculator\"](\"http:\/\/blog.123print.com\/blog\/wp-content\/uploads\/2015\/03\/Calculator-225x300.jpg\")
Tip #1 \u2013 Know Your Numbers<\/strong>
\nWhen you are focused on your sales goal,\u00a0remember\u00a0to calculate in the \u201ccost\u201d of the goods for the sale. If you don\u2019t keep a good pulse on your overall costs, you can quickly end up in the red\u00a0after adding in other selling costs, which we will cover later in the blog. For every item that you sell, be sure that you have accurate cost of goods data to work from, as estimating can cost you big bucks.<\/p>\n
\n– Direct materials
\n– Direct labor
\n– Factory overhead
\n– Freight in and freight out<\/p>\n
\nBased on your business model, there are a variety of ways to set realistic cost of goods goals, but I am going to give you a\u00a0few scenarios to think about.<\/p>\n
\nMaterials, volume, delivery time, your discount strategy, they can all affect COGS. Ask your suppliers for suggestions on different raw materials and\/or finishing processes. You may find that there is a less expensive raw material that would be a transparent change to your current finished product.<\/p>\n