January 29, 2024

7 Simple Ways to Lower Cost of Goods Sold

COGS is a key indicator of business health that has a direct impact on a company’s profit margin. This is why it’s important to learn how to lower your cost of goods sold without sacrificing product quality. In this article, we’ll show you 7 simple ways to reduce your COGS and improve your bottom line.

The COGS formula consists of the sum of all costs related to producing a product, including raw materials and manufacturing overhead expenses. The final number will also include indirect costs like shipping, marketing, and distribution. These costs can be tracked using a good inventory management system, such as MarketMan.

One way to lower your COGS is to buy in larger quantities. By doing this, you can often get quantity discounts and take advantage of volume shipping discounts.

You can also reduce your COGS by implementing lean supply chain strategies that eliminate waste. This includes avoiding overstocking and making only what you need to meet demand. Moreover, you should only use the cheapest courier service to transport your goods.

In order to avoid overstocking, you should keep track of your inventory on a regular basis. This will help you avoid unnecessary storage fees and prevent lost items. In addition, you should also make sure that your products are weighed and priced accurately upon delivery.

Additionally, you can improve your COGS by utilizing upselling strategies. This could involve giving customers the option to upgrade to a higher-priced product when they purchase your original item. This will not only increase your revenue but it can also increase customer satisfaction.

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