Glossary
Cost per item
Also called: COGS
Cost per item is what you paid for one unit, stored on the variant so Shopify can work out margin and stock value.
It sits under the price on every variant, and it is the one field most stores leave empty.
What Shopify does with it
- Margin, shown next to the price as you type
- Profit columns in the sales reports
- Stock value on the inventory reports
- Cost of goods sold, which is what inventory turnover is built from
None of those work without it. They do not warn you either. They show zero, or they show a margin of 100%.
Put the landed figure in
Not the invoice price. The landed cost, with freight and duty spread across the units.
A jacket invoiced at £22 that lands at £27 reports an eleven-point better margin than it earns, and eleven points is the difference between a line worth reordering and one that funds your courier.
Where it goes wrong
The cost is set once at launch and never touched. Suppliers raise prices, currency moves, freight doubles, and the reports keep quoting a number from two years ago.
The other one is expecting a fix to reach backwards. Old orders keep the cost that was stored when they were placed, which is correct. It also means last quarter’s margin report will not move, whatever you correct on the inventory item today.
Related terms
Landed cost
Landed cost is what a unit of stock cost by the time it reached your shelf, including freight, duty and handling.
Inventory item
An inventory item is the countable half of a variant. Stock levels attach to it, one per location, not to the variant itself.
Inventory turnover
Also called: Stock turn
Inventory turnover is how many times you sell and replace your stock in a year. Higher means your money is working harder.