Whiteboard Wednesday: How to Calculate the True Cost of Goods

Fishbowl CMO Kirk Tanner is back with another installment of Fishbowl’s Whiteboard Wednesday. Last time he explained how to improve your business processes, and this time he addresses the important topic of calculating the true cost of goods.

The trouble with calculating the cost of goods is that prices may change over time, so you need to be consistent in your accounting method. You can choose from FIFO, LIFO, Average Cost, and Standard Cost. The important thing is to stick with one because each one calculates costs differently.

Then you need to factor in Landed Costs, which can include taxes, shipping costs, operating expenses, and risk management. And there are plenty of other things to take into consideration when figuring out how much your goods actually cost.

It’s well worth the effort because all of this math will help you set appropriate prices on your products to generate a healthy profit margin.

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About Robert Lockard

Robert Lockard is a copywriter with Fishbowl. He writes for several blogs about inventory management, manufacturing, QuickBooks and small business. Fishbowl is the #1-requested manufacturing and warehouse management software for QuickBooks users. Robert enjoys running, reading, writing, spending time with his wife and children, and watching movies.
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4 Responses to Whiteboard Wednesday: How to Calculate the True Cost of Goods

  1. Marilyn says:

    By listening to these short and informative clips I may yet become a responsible and knowledgeable business person! Thank you so much for doing these great videos.

    • There sure are a lot of details that go into running a business. It’s crazy. Hopefully these videos give people a clearer idea of how to get started and keep up with all the changes that keep coming.

  2. Pingback: Whiteboard Wednesday: How to Optimize Your Safety Stock | Fishbowl Inventory Blog

  3. Pingback: Watch Fishbowl’s First 5 Whiteboard Wednesday Videos | Fishbowl Inventory Blog

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