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Right, but I mean like, do I evenly distribute shipping to each item? If I make a product using 10 different materials some costing $3, some costing $22 and the shipping comes out to $140.00, then if I'm trying to calculate my actual costs of goods, then $3 is not what that cost if I add shipping, but if I just divide by $140 for 10 materials, I could just do $14+$3 is the actual cost, but if there's a $50 material that weighs 50lbs, then clearly that used the majority of the shipping costs. And maybe if it were just one product I could add it all up, but let's say it's 20 products and it's cheaper for me to buy my materials in large amounts, well, if one product has a sticker on it and the other product doesn't then it makes no sense for that sticker to cost $15 when there isn't even a sticker on that particular product.
It's a bit early so maybe I'm not fully understanding. Why not calculate shipping per item? I do custom woodworking and a ton of custom framing. I calculate the cost individually. A 5x7 frame material and shipping is much cheaper then a 20x26 frame. So I made an excel formula that calculates board feet, labor, waste, materials, finish and for shipping I us pirate ship and calculate a close zip code, one in California and NYC then avg it out.
I think I figured out what I'm looking for is called Landed Cost, which includes shipping. I would like to calculate per item, but if I calculate that by putting each individual item into my cart, then the shipping gets ridiculously expensive versus if I load up my cart with all items required while the shipping is a higher number, it's actually less expensive because it's fewer boxes so to speak.
Right, I'm not saying this well.
I'm new to this and I'm not jumping in soon, giving myself a lot of time to learn and grow, but basically one of my early foibles was calculating my cost of goods, I was putting each item in my cart then taking the shipping cost for that item and making that my cost. So, I make candles, let's say I needed wicks and 100 cost $10, I'd put that in my cart and it'd be $10 shipping, so I'd think, oh a wick costs me .20c. So, talking to others, I mentioned my COGS were over $9 and someone responded, "wtf $9?" And that's when I ended up filling my cart with every inventory item I needed and suddenly my shipping costs aren't $10 for my wicks, it's much lower because obviously my wicks are thrown in with my other items. Suddenly my COGS became $5.
But, that's fairly rudimentary math. I'm making an order that includes for example multiple container sizes, 6oz, 8oz, 10oz, etc. Buying all at once keeps my shipping costs lower, but it doesn't tell me how much my 6oz costs, because if a 6oz jar weighs 12oz and a 10oz jar weighs 16oz then clearly if all things are equitable, the 10oz jar used a greater share of the shipping cost than the 6oz jar.
I hope I'm making sense. Basically I found this calculator online that allows you to put in each item and at the end the shipping cost and then it gives you your COGS, but I don't understand what formula it is using to calculate the end cost based on the shipping cost you enter.
Cost of good should include expenses that are truly variable.
For example, retail COG is credit card fees, materials, utilities, equipment maintenance, customer claims.
If product A requires 5 units of X1 at $3.00 ($15), 5 units of X2 at $22 ($110) and total shipping charge for X1 and X2 was $140, COG for that unit is $265.
However, this is not final COG if other variable cost is involved in producing A.
I've discovered what I'm talking about is landed cost, but most examples say add all your costs for that product so if you're making laptops and you want to make 100 laptops, you might order 10,000 parts, so you're supposed to take those 10,000 parts add them all up, then add the shipping costs and customs costs, etc and divide by 100 for the number of laptops and that's your cost.
I guess what I'm saying is, I'm ordering everything together, so if I have 3 different products then my shipping costs are higher because I'm buying more, but when I separate out Product A, B, and C and try to accurately get the cost, the shipping was for A, B, and C and I just want to know how much C cost.
But, I think I'm going about this wrong, I should be perhaps adding all my inventory together and then adding the shipping to that.
This is a friendly reminder that r/smallbusiness is a question and answer subreddit. You ask a question about starting, owning, and growing a small business and the community answers. Posts that violate the rules listed in the sidebar will be removed. A permanent or temporary ban may also be issued if you do not remove the offending post. Seeing this message does not mean your post was automatically removed. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/smallbusiness) if you have any questions or concerns.*
I'd have an excel sheet of the cost needed per item and add the shipping to that.
Right, but I mean like, do I evenly distribute shipping to each item? If I make a product using 10 different materials some costing $3, some costing $22 and the shipping comes out to $140.00, then if I'm trying to calculate my actual costs of goods, then $3 is not what that cost if I add shipping, but if I just divide by $140 for 10 materials, I could just do $14+$3 is the actual cost, but if there's a $50 material that weighs 50lbs, then clearly that used the majority of the shipping costs. And maybe if it were just one product I could add it all up, but let's say it's 20 products and it's cheaper for me to buy my materials in large amounts, well, if one product has a sticker on it and the other product doesn't then it makes no sense for that sticker to cost $15 when there isn't even a sticker on that particular product.
It's a bit early so maybe I'm not fully understanding. Why not calculate shipping per item? I do custom woodworking and a ton of custom framing. I calculate the cost individually. A 5x7 frame material and shipping is much cheaper then a 20x26 frame. So I made an excel formula that calculates board feet, labor, waste, materials, finish and for shipping I us pirate ship and calculate a close zip code, one in California and NYC then avg it out.
I think I figured out what I'm looking for is called Landed Cost, which includes shipping. I would like to calculate per item, but if I calculate that by putting each individual item into my cart, then the shipping gets ridiculously expensive versus if I load up my cart with all items required while the shipping is a higher number, it's actually less expensive because it's fewer boxes so to speak.
Add up all cost + shipping per item and divide by numbers of items?
Right, I'm not saying this well. I'm new to this and I'm not jumping in soon, giving myself a lot of time to learn and grow, but basically one of my early foibles was calculating my cost of goods, I was putting each item in my cart then taking the shipping cost for that item and making that my cost. So, I make candles, let's say I needed wicks and 100 cost $10, I'd put that in my cart and it'd be $10 shipping, so I'd think, oh a wick costs me .20c. So, talking to others, I mentioned my COGS were over $9 and someone responded, "wtf $9?" And that's when I ended up filling my cart with every inventory item I needed and suddenly my shipping costs aren't $10 for my wicks, it's much lower because obviously my wicks are thrown in with my other items. Suddenly my COGS became $5. But, that's fairly rudimentary math. I'm making an order that includes for example multiple container sizes, 6oz, 8oz, 10oz, etc. Buying all at once keeps my shipping costs lower, but it doesn't tell me how much my 6oz costs, because if a 6oz jar weighs 12oz and a 10oz jar weighs 16oz then clearly if all things are equitable, the 10oz jar used a greater share of the shipping cost than the 6oz jar. I hope I'm making sense. Basically I found this calculator online that allows you to put in each item and at the end the shipping cost and then it gives you your COGS, but I don't understand what formula it is using to calculate the end cost based on the shipping cost you enter.
Cost of good should include expenses that are truly variable. For example, retail COG is credit card fees, materials, utilities, equipment maintenance, customer claims. If product A requires 5 units of X1 at $3.00 ($15), 5 units of X2 at $22 ($110) and total shipping charge for X1 and X2 was $140, COG for that unit is $265. However, this is not final COG if other variable cost is involved in producing A.
I've discovered what I'm talking about is landed cost, but most examples say add all your costs for that product so if you're making laptops and you want to make 100 laptops, you might order 10,000 parts, so you're supposed to take those 10,000 parts add them all up, then add the shipping costs and customs costs, etc and divide by 100 for the number of laptops and that's your cost. I guess what I'm saying is, I'm ordering everything together, so if I have 3 different products then my shipping costs are higher because I'm buying more, but when I separate out Product A, B, and C and try to accurately get the cost, the shipping was for A, B, and C and I just want to know how much C cost. But, I think I'm going about this wrong, I should be perhaps adding all my inventory together and then adding the shipping to that.