WooCommerce: How to Accurately Enter the Cost of Your Products (and Why It Matters!)
Selling products online using WooCommerce is fantastic. But beyond making your website look pretty, you need to understand the financial side. Accurately tracking the cost of your goods is crucial for pricing, profitability analysis, and making informed business decisions. This guide will walk you through how to enter the cost of your products in WooCommerce, even if you’re a complete beginner. We’ll break it down into simple steps and explain why it’s so important.
Why Entering the Cost of Your Products is Essential
Think of your WooCommerce store like a tiny business. You need to know your expenses to understand if you’re actually making money. Entering the cost of goods sold (COGS) into WooCommerce helps you:
- Calculate your profit margins: This is the difference between your selling price and your cost. Knowing your profit margins allows you to optimize pricing for maximum profitability. For example, if you sell handmade candles for $20, but your materials cost $5, your gross profit is $15. If your overhead is $8, you net profit is $7.
- Track your profitability: Seeing how much profit you’re making on each product over time allows you to identify your best sellers and products that might need price adjustments or even discontinuation.
- Make informed business decisions: Knowing your true costs helps you decide on discounts, promotions, and other marketing strategies. You’ll avoid accidentally selling products at a loss.
- Prepare accurate financial reports: Accurate cost data makes accounting and tax reporting much easier.
- Cost of Goods Sold (COGS) for WooCommerce by WPFactory: (Often free with premium upgrades)
- ATUM Inventory Management: (More advanced, but also offers COGS tracking)
- WooCommerce Cost of Goods: (A simpler, more focused option)
Ignoring your product costs is like driving a car without a fuel gauge. You might get somewhere, but eventually, you’ll run out of gas (or, in this case, money).
Where to Enter the Cost in WooCommerce
The primary way to enter the cost of a product in WooCommerce involves using a plugin or custom coding. WooCommerce itself doesn’t natively have a “Cost of Goods” field. This might seem odd, but WooCommerce is designed to be extendable, and there are plugins specifically designed for this purpose.
Here’s how to do it with a plugin (the recommended approach):
1. Install a “Cost of Goods Sold” (COGS) Plugin: Go to Plugins > Add New in your WordPress dashboard. Search for “Cost of Goods Sold WooCommerce.” Several reputable plugins are available. Popular options include:
Install and activate your chosen plugin.
2. Configure the Plugin (if necessary): Some plugins might require some configuration to link them correctly to your WooCommerce store and product data. The specific steps will vary depending on the plugin you choose, so refer to the plugin documentation.
3. Enter the Cost for Each Product: Once the plugin is installed, you’ll usually find a new field within the product editing screen in WooCommerce. Navigate to Products > All Products and select a product to edit. Look for a field labeled something like “Cost of Goods,” “COGS,” or simply “Cost.”
Example: Let’s say you sell handmade soaps. You open the “Lavender Soap” product in WooCommerce. You find the “Cost of Goods” field and enter `$3.50`. This represents the total cost of materials (oils, lye, lavender buds, packaging) to make one bar of soap.
Manually Adding a Custom Field (Advanced Users)
While a plugin is recommended, experienced developers can add a custom field to WooCommerce to store the cost. This involves using PHP and potentially some database manipulation. This is not recommended for beginners. Here’s a brief overview:
1. Edit your theme’s `functions.php` file (or use a code snippets plugin). Important: Back up your website before making any code changes!
2. Add the custom field using the `woocommerce_product_options_pricing` action:
add_action( 'woocommerce_product_options_pricing', 'woo_add_custom_cost_field' );
function woo_add_custom_cost_field() {
global $woocommerce, $post;
echo ‘
‘;
}
3. Save the custom field value using the `woocommerce_process_product_meta` action:
add_action( 'woocommerce_process_product_meta', 'woo_save_custom_cost_field' );
function woo_save_custom_cost_field( $post_id ) {
$woocommerce_cost_price = $_POST['_cost_price'];
if ( ! empty( $woocommerce_cost_price ) ) {
update_post_meta( $post_id, '_cost_price', esc_attr( $woocommerce_cost_price ) );
}
}
4. Retrieve the cost value when needed: You’ll need to use `get_post_meta()` to retrieve the value of the `_cost_price` meta key for each product when you need to calculate profit margins or generate reports.
Warning: Incorrectly implementing custom code can break your website. Only attempt this if you have experience with PHP and WordPress development. Plugins provide a safer and often more feature-rich solution.
Important Considerations
- Include *all* costs: Don’t just think about the raw materials. Include labor costs (if applicable), packaging materials, shipping supplies, and even a portion of your overhead expenses if you want a truly accurate cost of goods sold.
- Update costs regularly: Prices of materials and shipping fluctuate. Review and update your costs periodically to ensure your profit margins remain accurate.
- Be consistent: Use the same method for calculating costs for all products. This will ensure your data is comparable and reliable.
- Consider variable costs: Some costs might change depending on the quantity of products you purchase. For example, you might get a discount on raw materials if you buy in bulk. Account for these variable costs when calculating your cost of goods sold.
Example Scenario: Selling Coffee Beans
Let’s say you sell bags of coffee beans online. Here’s how you might calculate the cost:
- Raw coffee beans: $5 per pound.
- Packaging (bag, label): $0.50 per bag.
- Labor (grinding, packaging): $1 per bag.
- Shipping supplies (box, tape): $0.25 per bag.
Your total cost of goods sold per bag of coffee beans is $5 (beans) + $0.50 (packaging) + $1 (labor) + $0.25 (shipping) = $6.75. You would enter `$6.75` into the “Cost of Goods” field for that product.
Conclusion
Entering the cost of your products in WooCommerce might seem like an extra step, but it’s a vital one for running a successful and profitable online store. By using a COGS plugin or, for advanced users, adding custom code, you can gain valuable insights into your business’s financial performance. Start tracking your costs today and watch your profits grow!
