Cost of goods sold (COGS)
Cost of goods sold is what you paid for the stock you actually sold during a period.
Cost of goods sold, or COGS, is the purchase cost of the goods that went out of your shop as sales during a period. It does not include rent, salaries or electricity. It is only the cost of the stock itself. Subtract COGS from sales and you get gross profit.
The formula
COGS = opening stock + purchases during the period − closing stock.
Example
| Item | Amount |
|---|---|
| Opening stock on 1st of the month | Rs 400,000 |
| Purchases during the month | Rs 900,000 |
| Closing stock at month end | Rs 350,000 |
| Cost of goods sold | Rs 950,000 |
| Sales during the month | Rs 1,150,000 |
| Gross profit | Rs 200,000 |
A kiryana store started the month with Rs 400,000 of stock and bought Rs 900,000 more, so Rs 1,300,000 of goods passed through the shop. Rs 350,000 was still on the shelves at month end, which means Rs 950,000 worth was sold. Sales were Rs 1,150,000, leaving a gross profit of Rs 200,000.
Why it matters
Many shopkeepers judge a month by how much cash came in. That figure hides the real question: how much of it was profit after paying for the goods. If COGS rises faster than sales, margins are shrinking, even when the drawer looks full.
How software handles it
Working out COGS by hand needs an accurate stock count. Inventory software that records every purchase and every sale with its cost keeps a running stock value, so the closing figure does not depend on a weekend spent counting. Taajir records purchases, sales and stock together.
Tell us about your business.
We reply with a price, a demo time and the setup that fits your branches, counters and users.