What is COGs?
Cost of Goods Sold is exactly what it sounds like. It’s the cost of your inventory that has sold.
You need to know this so you can figure out your net profit, and for tax reasons.
When I first started reselling I would manually keep track of what I bought each item for, how long it took to sell, how much it sold for and how much it cost to ship.
I liked to know my exact profit and total expenses for each item sold- that’s why I would meticulously go down my sales and record all this. I thought this would help me know my business better.
This is what we call a massive waste of time.
Thankfully, there are much more efficient ways to record this accounting data- things like the fees and the COGs (to name a few):
This software links up with your eBay account so it automatically keeps track of your sale price, cost of shipping, and the fees.
There’s no point in manually keeping track of these things.
It’s much more efficient to let GoDaddy collect all this data, and then review your numbers on a monthly basis.
But, there is one shortcoming- the software doesn’t keep track of you Costs of Goods Sold.
You may be able to enter this into the software, but I’ve found it’s faster and easier just to keep track of the Cost of Goods Sold in an accounting notebook. This way I can just go down my sold items once a month and write down how much I paid for each.
I have a solid memory and spend way too much time thinking about eBay, so I’m usually good at remembering how much I paid for items.
But sometimes I don’t remember the exact selling price. What do I do then?
I mainly sell clothing which has constant prices at Goodwills near me. A short sleeve shirt is $3.99, a long sleeve is $4.99, a sweater is $5.99, and a pair of pants is $5.99.
When I can’t remember the price I usually go by these guidelines. And if I really can’t remember, I estimate.
I mainly sell used books using the Amazon FBA program. So the cost of my inventory is low-a book usually costs $2 or less near me.
Amazon’s fee system is much more confusing than the standard ~10% eBay fees (and the additional ~3% PayPal Fees). So manually keeping track of the sale prices, the COGs, and the fees for Amazon would be a numbers nightmare- trust me, I tried to do it for a while.
That’s why I use a listing software called accelerlist to keep track of all this.
Using a listing software makes selling on Amazon efficient and helps me keep my sanity while I’m doing it.
Amazon has their own labeling and organization system, so you need to scan your inventory into their system. But, doing this through the Amazon website is slow, confusing, tedious and inefficient.
Accelerlist lets you fill in premade templates for the descriptions, helps you price your items, keeps track of the Amazon fees, and shows your profits- It costs $35 per month, but it pays for itself everytime I use it.
Here’s what listing on the Amazon website looks like.
First you have to find the item, and set the price, and then manually input the description.
After, you need to add dangerous goods information. Even for a videogame!
Using a listing software makes life much easier because it bypasses all this.
Most of my other projects I’m working on don’t have any startup costs. So the COGs is zero.
Sometimes I do pay people in Fiverr to create covers for me for Kindle. In that case I record it in a materials spreadsheet, so I can deduct it at the end of the year as a business expense.
Regardless of what site you’re selling on, there is usually a software that can help make your accounting and bookkeeping 75% easier.
I used to spend hours each week recording all the buy prices of my inventory on an Excel Spreadsheet. Now, the only things I have to keep track of is the COGs and materials (like tape, polymailers, packing paper, etc). This probably saves me 5 to 10 hours a month.
I think the best bookkeeping method is the most automatic.
I used to think manually writing down every sale in a spreadsheet would make me feel more in control of my business. But, it did the opposite and made it feel like I had an unskilled data entry job.
Outsourcing your accounting to a software is a huge time saver and costs mess less than $50: Accelerlist= $35/ month and Godaddy is $9.99/ month.
$45 a month might sound like a lot, but it’s well worth the cost.
Neither of these listing softwares are affiliates, so I have nothing to gain preaching the benefits of automatic accounting.- I just know it makes reselling much easier, and saves me a lot of time and mental energy because it does all of this work for me.
It’s also a good idea to hire an accountant (though I have yet to do that).
All in all, hands off is better when it comes to accounting!