Free COGS Calculator
for Small Businesses

// guide

What Is COGS (Cost of Goods Sold)?

COGS is the direct cost of the inventory you sold during a period. It includes the cost of purchasing or producing the items, but not operating expenses like rent, labor, or marketing.

How to Calculate COGS

The COGS formula is straightforward:

For example, if you started the month with $5,000 in inventory, bought $2,000 more, and ended with $3,000 remaining:
COGS = $5,000 + $2,000 − $3,000 = $4,000

Why COGS Matters for Small Businesses

• •

  Pricing decisions: You can't price profitably if you don't know what your goods cost.

• •

  Tax deductions: COGS reduces your taxable income. Accurate calculations mean you're not overpaying.

• •

  Margin tracking: COGS tells you if your margins are shrinking over time — a warning sign for waste, theft, or supplier price increases.

• •

  Inventory health: A rising COGS with flat revenue means you're buying more but not selling more. That's a red flag.

COGS vs. Operating Expenses

COGS includes only the direct cost of goods: what you paid suppliers, freight in, manufacturing costs. It does NOT include rent, utilities, payroll, marketing, or software subscriptions. Those are operating expenses (OpEx), tracked separately.

How TrackItWeekly Helps You Track COGS Automatically

Instead of manually calculating COGS each month, TrackItWeekly tracks your inventory value in real time. Every count, every order, every adjustment updates your numbers automatically. You'll always know your current inventory value — which makes COGS a 10-second calculation instead of a spreadsheet nightmare.

Learn more on our inventory management blog or explore our feature set.