Cost calculation: how to do it?

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For online store owners, calculating the cost price of each product or service is essential to ensuring the profitability of their business. This calculation allows you to determine the unit cost price and thus set the selling price while taking margins into account. This article guides you step by step to calculate the cost price and optimize your selling prices.

What is cost price?
The cost price of a product or service represents all the expenses incurred by a company to make it available to the customer. Unlike the selling price, which includes a profit margin, the cost price allows you to determine the minimum amount required to cover all costs.

Selling price excluding tax: The price invoiced to the customer, excluding taxes.
Cost price: Total direct and indirect costs associated with the product or service.
The difference between the selling price and the cost price is called the gross margin. The latter must be sufficient to cover the desired profits.

What are the components of cost price?
If you have an online store, your cost includes ebay database various expenses. These costs can be divided into direct and indirect expenses. Direct expenses are those directly related to the creation or purchase of products, such as:

Raw materials: Cost of materials needed to manufacture the product.
Purchasing costs: Costs incurred to purchase products from suppliers.
Supplier delivery: Transport cost to receive the products.
On the other hand, indirect costs are represented by costs which are linked to the overall operation of the company but do not directly concern a product such as:

Hosting and maintenance of the e-commerce site
Advertising and SEO to attract customers
Transaction fees associated with payment gateways
Logistics costs for preparing and shipping orders
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