![]() ![]() It’s time to learn how to calculate it for yourself. If the costs of making a product are so high that you cannot sell the product at a profit, it’s time to find ways to reduce your COGS or re-evaluate your strategy altogether. An inventory that’s low because of theft will result in a higher COGS and lower profits. For example, if you have a theft problem, your inventory will be notably lower than anticipated when you perform your year-end count. Draws awareness to problems: A sudden spike in COGS can indicate that you have a new problem to solve.Brings attention to operational efficiency: Minimizing COGS is a way to reduce the likelihood of unnecessary expenses like overstocking, product damage and missing inventory. ![]() If you see gross margins increasing, your products are more valuable. ![]() The more efficient your production, the more gross margin you can earn.
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