Amazon Seller Dictionary
This dictionary is designed to help Amazon sellers quickly understand the most important terms used inside Amazon’s ecosystem.
COGS (Cost of Goods Sold)
COGS represents the total direct cost of producing or sourcing the products you sell. It is one of the most important metrics for calculating profit and pricing strategy.
What is COGS?
Cost of Goods Sold (COGS) refers to the direct expenses involved in producing or purchasing a product. For Amazon sellers, this usually includes what you pay your supplier, manufacturing costs, and packaging. It does not include marketing or operational expenses.
- Product manufacturing or wholesale cost
- Packaging and labeling costs
- Factory-level labor and materials
Why COGS Matters
COGS is the foundation of your profitability. If you don’t calculate it correctly, you may think your product is profitable when it’s not. It directly affects your pricing decisions, margins, and long-term sustainability.
- Used to calculate profit margin
- Helps determine pricing strategy
- Impacts ROI and scalability