Brothh

What it means

COGS is the total cost of making and delivering one unit of product. For makers, it includes raw materials (with wastage), labor (with payroll burden), packaging, shipping you absorb, payment processing, platform fees, and allocated overhead (rent/utilities/insurance divided by monthly volume).

Gross margin = (price − COGS) ÷ price. Most makers underprice because they miss 2-4 of the COGS buckets. Common misses: packaging (box, labels, stickers, tissue, mailer — often $2-4/unit), payment fees (~3.5% of price), platform fees (6-15%), and self-employment tax (15.3% on profit).

Examples

Candle maker unit COGS

Wax $1.80 + wick $0.12 + fragrance $0.85 + jar $1.10 + label $0.20 + box $0.65 + labor $3.50 + overhead $1.25 = $9.47

At $28 retail

COGS $9.47 + fees $3.80 + ship $2.00 = net $12.73/unit (45% margin)

Do

Include YOUR labor at a real hourly rate — not $0.
Rebuild COGS any time a supplier price changes.

Don't

Confuse COGS with operating expenses (payroll of the shop manager, software subscriptions, office supplies) — those go elsewhere on the P&L.

Related terms

Markup vs Margin

Markup is cost-based (price / cost). Margin is price-based (profit / price). A 50% markup is a 33% margin — not the same.

Keystone Pricing

Classic retail pricing formula: sell at 2× wholesale cost. Yields a 50% margin (100% markup).

Calculators that use this

True Product COGS (No-BS)

The real cost to make and sell one unit — materials with wastage, packaging, labor with burden, overhead, payment + platform fees, shipping absorbed, income + self-employment taxes. All in.

Packaging Cost Per Unit

Sum the real packaging stack — box, label, stickers, tissue, mailer, void fill, tape, ship label — into a single per-unit cost.

Wastage Buffer Reference

Industry-standard waste percentages for 20 common maker materials — feed into the True Product COGS calc for honest pricing.