Free small business calculator
COGS Calculator — Cost of Goods Sold
Calculate Cost of Goods Sold from materials, labor, and overhead. Free COGS calculator for small businesses with formula, examples, and pricing insights.
Enter the minimum numbers needed to get a result.
Updated live as you type.
Planning estimate only. It does not include taxes, overhead allocation, depreciation, discounts, or other business-specific adjustments.
Cost of Goods Sold (COGS) is the direct cost of producing goods or services, including materials, labor, and overhead, used to calculate gross profit and pricing strategy.
Formula and example
COGS = Materials + Direct Labor + Overhead; Cost per Unit = COGS ÷ Units Produced
If materials cost $5,000, labor is $2,500, overhead is $1,200, and you produce 500 units, COGS is $8,700 and cost per unit is $17.40.
Methodology & assumptions
Last updated: 2026-06-13Calculation method
Uses direct material, labor, and overhead inputs to calculate total COGS. Per-unit cost assumes uniform production. Does not account for inventory changes, spoilage, or indirect materials under GAAP.
Data sources
Uses the numbers you enter and standard small-business finance formulas. Benchmark comparisons use HustleFin industry benchmark pages where available.
Limitations
For estimation purposes only. Does not replace accounting records or GAAP COGS calculations. Does not include inventory valuation methods (FIFO, LIFO) or period costs.
Input definitions
- Materials cost: Total cost of raw materials and supplies.
- Direct labor cost: Wages for production or service workers.
- Manufacturing overhead: Indirect costs like utilities, rent, equipment.
- Units produced: Number of units or jobs completed.
Frequently asked questions
What is included in COGS?+
COGS includes direct materials, direct labor, and manufacturing overhead directly tied to production. It excludes selling expenses, marketing, administration, and distribution costs.
How does COGS affect profit margin?+
COGS is subtracted from revenue to calculate gross profit. Lower COGS means higher gross margin. Tracking COGS helps you price products profitably.
What is a good COGS percentage?+
It varies by industry. For product businesses, COGS is typically 30-50% of revenue. For service businesses, it's usually lower (15-30%). Use our profit margin calculator to analyze your margins.
Does COGS include labor costs?+
Yes, direct labor costs for production workers are included. Administrative salaries and sales commissions are not — those are operating expenses.
What is COGS margin and how do I calculate it?+
COGS margin isn't a standard accounting term — what most people mean is gross margin: (Revenue − COGS) ÷ Revenue × 100. For example, $10,000 in revenue with $3,000 COGS gives a 70% gross margin. A lower COGS means a higher margin. Use our gross margin calculator to calculate your margin directly, or our profit margin calculator for net margin after all expenses.
Related guides
Go deeper with in-depth guides on the concepts behind this calculator.
Next: What to do after this
Pick one next action. These are sequenced by the most common workflow after this calculation.
Continue the workflow
Estimate margin, convert margin to markup, then check the sales volume needed to break even.
Profit Margin Calculator
Calculate profit, margin percentage, and pricing health from cost and revenue.
Gross Margin Calculator
Calculate gross profit and gross margin from revenue and COGS.
Markup Calculator
Calculate selling price, markup, profit, and margin from cost.