What is included in cost of goods sold?

COGS includes the direct cost of the products you sold: the supplier unit cost plus inbound freight, import duties, and any prep or labeling. For Amazon sellers this is your landed cost per unit. It excludes marketplace fees, fulfillment fees, storage, and advertising, which are selling expenses rather than product cost.

Is cost of goods sold an expense?

Yes, COGS is an expense, but a special one. It only becomes an expense at the moment a unit sells; until then the inventory sits on your balance sheet as an asset. On the income statement, COGS is subtracted from revenue to give gross profit, above your operating expenses.

What is the difference between cost of goods sold and cost of sales?

They are essentially the same figure for a product business. "Cost of sales" is the term some companies and service businesses use, while "cost of goods sold" is standard for sellers of physical products. Both measure the direct cost of what was sold during the period.

Where do you find cost of goods sold?

COGS appears on your income statement (profit and loss), directly under revenue. You won't find it pre-calculated in Seller Central; you derive it from your own inventory records using beginning inventory, purchases, and ending inventory, or your accounting software computes it as units sell.

Is cost of goods sold a debit or a credit?

COGS is a debit. As an expense account, it increases with a debit. When a sale is recorded, you debit COGS and credit your inventory asset account for the cost of the units sold, which moves the cost off the balance sheet and onto the income statement.

Learn · COGS & inventory

How do you find cost of goods sold (COGS)?

Short answer

Find cost of goods sold with this formula: COGS = beginning inventory + purchases during the period - ending inventory. It captures only the cost of the units you actually sold, including landed cost (product cost plus inbound freight, duties, and prep), not your unsold stock.

By Marcus Brandt · Head of Seller Accounting

Updated June 26, 2026

Cost of goods sold (COGS) is the direct cost of the products you sold during a period. You don't add up every invoice you paid suppliers; you isolate the cost of the units that left your shelves. The standard formula does this for you: take what you started with, add what you bought, and subtract what's left at the end. Whatever's left over is what you sold.

The COGS formula

The accounting formula is the same whether you sell on Amazon, eBay, or your own store. It works because every unit you bought either got sold or is still in inventory, so subtracting ending inventory leaves exactly the cost of what sold.

All four inputs must be valued at cost, never at retail price. For Amazon sellers, "cost" means landed cost: the product price plus inbound freight, import duties, and prep or labeling, divided across the units in that shipment.

•COGS = Beginning inventory + Purchases - Ending inventory
•Beginning inventory = cost value of stock on hand at the start of the period
•Purchases = cost of all new inventory bought during the period (at landed cost)
•Ending inventory = cost value of stock still on hand at the end of the period

A worked example

Say you run a single ASIN over one quarter. These numbers are illustrative, not real Amazon figures:

You start the quarter with $10,000 of inventory. During the quarter you buy another $25,000 of product (landed). At the end you count $8,000 of stock still sitting in FBA and your prep center. Plug those in: COGS = $10,000 + $25,000 - $8,000 = $27,000. That $27,000 is the cost of the units you sold this quarter. The remaining $8,000 stays on your balance sheet as an asset until it sells.

•Beginning inventory: $10,000
•Plus purchases: $25,000
•Minus ending inventory: $8,000
•= COGS: $27,000

What to include (and exclude)

COGS is only the direct cost of getting product ready to sell. Include the unit cost from your supplier, inbound freight to the warehouse, customs duties and tariffs, and prep, labeling, or kitting. These together are your landed cost per unit.

Leave Amazon's selling fees, FBA fulfillment fees, storage fees, and PPC out of COGS. Those are selling expenses that hit your profit and loss below the gross-margin line, not part of product cost. Keeping them separate is what lets you see true gross margin versus the drag from marketplace fees. Because those fees move and vary by category and size, verify them against Amazon's current fee schedule rather than assuming a fixed rate. A quick way to model the fee side per unit is a free Amazon FBA fee calculator, which you can run alongside your landed cost to see the full picture.

Getting COGS right at the SKU level is hard when shipments arrive in batches at different costs. BeanHawk tracks perpetual per-SKU landed cost so your COGS reflects the actual cost layers behind each unit sold, not a rough blended guess.

To pressure-test your numbers on a specific product, run it through the free Amazon FBA fee calculator and see profit per unit after fees.

Frequently asked questions

What is included in cost of goods sold?: COGS includes the direct cost of the products you sold: the supplier unit cost plus inbound freight, import duties, and any prep or labeling. For Amazon sellers this is your landed cost per unit. It excludes marketplace fees, fulfillment fees, storage, and advertising, which are selling expenses rather than product cost.
Is cost of goods sold an expense?: Yes, COGS is an expense, but a special one. It only becomes an expense at the moment a unit sells; until then the inventory sits on your balance sheet as an asset. On the income statement, COGS is subtracted from revenue to give gross profit, above your operating expenses.
What is the difference between cost of goods sold and cost of sales?: They are essentially the same figure for a product business. "Cost of sales" is the term some companies and service businesses use, while "cost of goods sold" is standard for sellers of physical products. Both measure the direct cost of what was sold during the period.
Where do you find cost of goods sold?: COGS appears on your income statement (profit and loss), directly under revenue. You won't find it pre-calculated in Seller Central; you derive it from your own inventory records using beginning inventory, purchases, and ending inventory, or your accounting software computes it as units sell.
Is cost of goods sold a debit or a credit?: COGS is a debit. As an expense account, it increases with a debit. When a sale is recorded, you debit COGS and credit your inventory asset account for the cost of the units sold, which moves the cost off the balance sheet and onto the income statement.

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