Commerce operations
COGS (cost of goods sold)
COGS is the direct cost of the products sold in a period — typically unit cost plus inbound freight and duties — excluding marketing, overhead and outbound shipping.
For accurate margin reporting COGS must be tracked at variant level, not product level. Sizes and configurations of the same product frequently differ in cost, and a product-level average silently misprices the mix.
It also needs to be time-anchored. Landed cost changes with each purchase order, and applying today's cost to last quarter's orders produces margin history that never happened.
The version that catches people out is a freight spike. If a shipment arrives at double the usual freight cost and the system stores one current cost per variant, restating it retroactively rewrites every historical order at the new figure — so last quarter's margin drops for reasons that had nothing to do with last quarter. Costs need to be versioned with effective dates, and orders need to hold the cost that applied when they shipped.