Cost price

Cost of goods sold is what it cost you to bring an item into your store. It can be the price you paid your supplier to purchase the item, or what it cost you to manufacture it yourself. The cost price is also called the purchase price, and it is always calculated excluding VAT. This is because VAT is not a cost for you as a VAT-registered business, since you get it back from the tax authorities.

Cost Price vs. Selling Price

It’s important not to confuse cost price with selling price. The selling price is what the customer pays in your online store, and it’s typically shown including VAT. The cost price is what you yourself paid for the item. The difference between the two is your profit, and it is precisely that difference that you live off of.

What is cost price used for?

• To calculate your profit margin and your contribution margin per item.
• To determine your inventory value—that is, what the items in stock are worth.
• To set reasonable prices so you make money on every sale.
• To record transactions correctly in your books.

In Shoporama, you can set a cost price for both the product itself and each individual variant, so a product available in multiple sizes or colors can have different cost prices if you paid different amounts to purchase them.

The cost price is for your eyes only and for your accounting records. It is never displayed to customers in your online store.