Cost of Goods Sold (COGS)

What COGS means

Cost of goods sold (COGS) is the direct cost of the inventory you actually sold during a period. For a wine program it is the landed cost of every bottle and glass that left the cellar through sale or pour, not the cost of everything you hold. COGS is subtracted from revenue to calculate gross profit, and dividing COGS by revenue gives the cost percentage, the list-wide equivalent of pour cost.

A common way to derive COGS is opening inventory value plus purchases minus closing inventory value. The accuracy of that figure depends entirely on valuing inventory correctly, which is where lot-level cost data matters.

Why it matters

COGS is the line that turns sales into profitability. If inventory is valued loosely, using a single average cost while supplier prices move, COGS is wrong and margin reporting is wrong with it. Accurate COGS lets owners see true gross margin, compare periods, and spot cost creep before it eats the bottom line.

In a wine program, reliable COGS depends on a clean record of what was bought, at what cost, and what was depleted. Vinius models inventory as lots with cost basis and tracks depletion through movements, so the inputs to COGS reflect real acquisition costs rather than estimates. See inventory management.