% COGS of Sales
How much of everything you took in went straight back out to whoever made the goods.
What it means
% COGS of Sales is your cost of goods divided by Total Sales, as a percentage. Total Sales is Gross Sales plus shipping and tax, minus discounts and refunds — the whole net top line for the period, not just the product part of it.
It's the shop-wide version of the cost ratio. The per-product columns tell you which lines are expensive to make; this one tells you what that adds up to across everything you sold.
Show the math
Formula and a worked example
COGS is what the units you sold cost you, summed across the period from the cost price on each variant.
Total Sales is Gross Sales + Shipping + Tax − Discounts − Refunds.
Worked example. A quarter takes €200,000 of Total Sales and the goods sold cost €80,000. % COGS of Sales = 80,000 ÷ 200,000 = 40%. Gross Profit is the other €120,000, which is a Gross Margin of 60% — the two always add to 100%, because Gross Profit is Total Sales minus COGS.
Now look at what's inside that denominator. Say €15,000 of it was delivery charged to customers and €20,000 was tax collected. Strip both and the product side of the business is €165,000, against which the same €80,000 of cost is 48%. Nothing changed except what you divided by.
It answers the question
What share of the money coming in is already committed to the people who make your products? Whatever's left is all you have to pay for advertising, delivery, fees, staff and profit.
Why it matters
It's the one large cost you commit to before a single sale happens. Ad spend and discounting are decisions you take weekly; this one was taken when you placed the purchase order, and it stays fixed until the next one.
It also sets the ceiling on everything below it on the Shopify Profit page. A shop running at 55% cost has 45 points to cover marketing, fulfilment, fees and overhead. A shop at 30% has 70. Two businesses with identical ad efficiency end the year in completely different places because of this line.
Because tax and delivery charges sit in the denominator, the ratio reads lower than the cost share of your products alone. That's consistent month to month, so trends are trustworthy even where the level flatters. Compare it to its own history rather than to a per-product cost column.
What good looks like
Worth knowing that the bands beside it don't line up exactly: Gross MarginGross MarginProfit after product cost; the ceiling on what you can spend to grow.60% or more is healthy is graded healthy from 60%, which implies a 40% cost share rather than 35%. They're two rules of thumb, not two views of one line — read each against its own scale. And every band assumes your cost prices are complete. Missing variant costs pull this number down and make a thin business look comfortable.
How to improve it
| Lever | What you do | Expect | How long | Watch out for |
|---|---|---|---|---|
| Fast Complete the cost prices first | Check every variant carries a real cost before you act on the ratio at all | A truthful number, usually a worse one | Same week | Every margin on the page drops the day you fix it. The business didn't change; you were reading an incomplete number before. |
| Fast Cut the discounting | End always-on codes so more of each sale reaches the Total Sales line | The denominator grows, so the cost share falls | 2–4 weeks | Orders usually dip when the code goes. Watch order volume for a full month before you decide the margin was worth it. |
| Slow Renegotiate the supply on your top lines | Take your highest-volume products back to the supplier, or to a second one | Cost share falls and stays down | 1–2 quarters | A new supplier resets your quality and lead times, and a stock-out during the switch costs more than the saving is worth. |
| Slow Reprice rather than re-source | Raise list prices on the lines whose cost you can't move | Cost share falls without touching a supplier | 1 quarter | The ratio improves the day the price changes; demand answers weeks later. Watch orders and refunds together before calling it. |
Every lever costs something somewhere. The last column is the one to read twice.
Read it with
A ratio moves when either half moves. Reading it against the top line is what tells you whether you have a cost problem or a sales problem.
Growing on better terms
You sold more and kept more of each euro. The best corner, and usually the result of a decision made a quarter ago.
Volume bought with margin
Growth arrived, but a bigger slice of it goes to the supplier. Fine during a launch, a habit worth naming if it repeats.
Quieter but cleaner
Fewer sales, better terms on each. Controlled rather than comfortable — check that units held up.
Squeezed
Less money in and more of it committed. Every line below this one on the page is under pressure in this corner.
The same fact from both ends — they add to 100% by construction, because Gross Profit is Total Sales minus COGS. Reading both isn't redundant: this one frames the decision as a cost to negotiate down, the other frames it as headroom to spend. Most owners act on one framing and not the other.
Contribution Margin takes tax, shipping and advertising out on top of product cost. A healthy cost share with a thin Contribution Margin says your problem is downstream — the goods are fine, the cost of selling them isn't. Neither number points there on its own.
Common misreads
Product cost is the first deduction, not the only one. Advertising, delivery, payment fees and everything in Cost Settings still come out of the remainder, and together they usually take more than the goods did.
Different denominators. This divides by Total Sales, which includes shipping and tax; the product columns divide by product revenue only. This one reads lower, and the gap isn't performance.
Check your variant costs are complete first. Products with no cost price recorded contribute revenue to the denominator and nothing to the numerator, which is the most common reason this number looks better than the business is.
Also called
Cost of sales percentage · COGS ratio · cost of goods as a share of revenue
See yoursYour cost share for the period, beside Gross Margin, Contribution Margin and the rest of the profit stack.
Open Shopify Profit →