Metrics & KPIs

COGS

Cost of Goods Sold — the direct cost of the product itself, including supplier cost and often inbound shipping. Does not include ads or overhead.

COGS is the direct cost of getting one unit of product into a customer's hands — supplier invoice, inbound shipping to the 3PL if applicable, and any per-unit fulfillment cost. It does not include ads, software, salaries, or overhead.

COGS as a percentage of retail price is the central lever of contribution margin. A product with a 30% COGS ratio has a structurally easier time scaling than one at 45%, because every extra dollar spent on ads has more room to return before hitting breakeven.

Common COGS mistakes: forgetting to add shipping cost (the supplier quotes the product at $8 but shipping is $4, making real COGS $12), ignoring payment-processing fees, and not accounting for refund rates (a 5% refund rate effectively inflates COGS by 5% on every other order).

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Related terms in Metrics & KPIs
AOV
Average Order Value — the average dollar amount a customer spends per transaction. Total revenue divided by number of orders.
AOV Lift
The increase in Average Order Value produced by a specific tactic — bundles, upsells, order bumps, quantity discounts. Every dollar of AOV lift compounds against ad spend.
ATC
Add to Cart — the tracked event when a visitor adds an item to their cart. ATC-to-purchase ratio is a powerful diagnostic of checkout friction.
Attach Rate
The percentage of orders that include a secondary item — typically an upsell, bundle, or order bump. Every 10% of attach rate is ~4-6% of AOV lift.
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