The maker's costing glossary
COGS (Cost of Goods Sold)
The direct cost to make the products you actually sold.
COGS is the total direct cost — materials, direct labor, and directly-attributable machine time — for the units you sold in a period. It excludes indirect overhead like studio rent or software. For a maker, an accurate per-unit COGS is the single foundation every price, margin, and profit number is built on.
Why it matters
COGS is the floor beneath every price. Sell below it and you lose money on each item, no matter how busy you are. Know it precisely and you can set prices, quote wholesale, and see which products actually earn their place in your line. Almost every 'I'm working constantly but broke' story is a COGS the maker never really calculated.
How to calculate it
Add up the direct costs of a unit: the materials it consumes (by the exact quantity, not the pack you bought), the labor hours to make it at your rate, and a share of machine time. Do it per product, then it rolls up across everything you sold.
COGS per unit = materials + direct labor + direct machine cost
Example
A cutting board uses $18 of lumber, 1.5 hours of labor at $28 ($42), and $1 of machine time. Its COGS is $61 — the price can never start below that.
In practice
Makers who track COGS discover their 'best seller' is often their worst earner — high labor, thin margin — while a quiet product quietly funds the business. COGS is what turns that hunch into a decision.
Common mistakes
- Costing materials by the pack you bought instead of the amount a unit uses.
- Leaving your own labor out, so COGS looks tiny and prices end up too low.
- Confusing COGS (direct) with total cost (which also carries overhead).
How CrafterBy handles it
CrafterBy builds COGS from your material library, labor rate, and machine costs automatically — and when a material price changes, every product's COGS updates with it.