We know that your Cost of Goods and Supplier Shipping costs can change from order to order. Use the Effective From date to assign different costs for each order when your costs change. The Effective Date corresponds to the date of a sale and will use the costs you entered for that date range. You can enter as many different cost entries for an item as you would like as long as they each have a different effective date.
Adding a New Cost and Date Range
- Click on the arrow next to the product to expand the dropdown menu, then click Add Cost to bring up the cost modal
- Enter your new costs of goods, supplier shipping, and any miscellaneous costs.
- Choose a new 'Effective From' date using the drop-down calendar. This is the first date for a sale that you want to use this new cost for. When you add a new 'effective from' date the 'effective to' date for the previous date range will be automatically calculated.
In the example above, there are 3 entries, each reflecting a different Total Cost and Effective Date.
- For any sale made on or after July 10th 2019 (until you enter a new cost entry) we will use $21.25 for COGs and $3.75 for Supplier Shipping which equals a Total Cost Per Unit of $25.00.
- For any sale made between April 3rd, 2019 to July 9th, 2019 will use $22.75 for COGs and $3.90 for Supplier Shipping which equals a Total Cost Per Unit of $26.65.
- From the first sale of this product to any sale up until April 2nd, 2019 we used $23.50 for COGs and $4.02 for Supplier Shipping which equals a Total Cost Per Unit of $27.52.
The best way to add your Cost of Goods for new stock is to estimate when your current batch of inventory will run out and use the date when the new batch of inventory with the new costs will start to sell. The new COGs should be assigned to start when the current inventory runs out of stock.
Determining what Effective from Date to use
Let’s say that Jungle Snugs has 100 units in stock for your first batch of inventory, and the COGs for this batch of inventory was $5.45mper unit with $0.76 in Supplier Shipping costs. This is what the Cost line should look like for the first/current batch of inventory:
But, when it comes to the next order of Jungle Snugs - 1000 units already stored in Amazon - the new stock has a new Cost of Goods of $4.00 per unit and the same supplier shipping cost of $0.76 per unit.
This is where it can get tricky (but not really)...what date should Jungle Snugs use as the start date of the new $4.00 per unit COGs?
Well, if Jungle Snugs is currently selling 10 units per day on average, then the current stock of 100 units will run out in 10 days; 100 units currently in stock divided by 10 units sold/day = 10 days worth of stock available. And, assuming the date today is August 1st, that means the current 100 units of inventory will run out on August 10th.
So, Jungle Snugs' new $4.oo per unit COGs for the 1000 units of new inventory should start on August 11th, the day AFTER the current stock runs out.
This is what the Cost line should look like for the new batch of inventory, in order for the $4.00 per unit to be calculated correctly:
Now that you have entered all of your costs you can now see your true profits!