Calculating your Cost Price and Average Cost Price
Cost price is one of the biggest expenses in your business - right after labour cost.
With the proper insight into your cost of goods, you can take real action to reduce your expenses, increase your profitability and, potentially save your business thousands and not become just another hospitality statistic.
Kounta enables you to easily view data on sales per product, revenue, cost price, and gross profit all either per product, categories or in unique reporting groups you set up yourself.
This real-time data helps you grow your business and reduce costs.
What’s in this Guide?
What is a Cost Price?
Cost price is also known as the cost of sale, cost of goods sold or just COGS for short - we always love a good acronym.
As it sounds, this is the cost you spent on materials or ingredients to create a product. If you are cooking in-house then this will include all the ingredients that go into your recipe. If you are buying pre-made goods, then this is simply the price you paid for them.
The cost price does NOT include labor costs or overhead expenses.
When we look at cost price, we also talk about Gross Profit. Gross Profit is the amount from your sales (revenue) after your cost price is removed.
How does Kounta calculate Cost Price?
We work with you to give you the level of granularity you need to track your costs across your business.
Cost price is calculated based on these points;
- The fixed cost price - this is the cost price for each product found on the “Product Info”
- Current market price - this price changes with every invoice you receive from your suppliers. This will adjust your 30-day “average cost price.”
- The recipe cost for your product
Pro Tip: If you are using recipes and purchasing through Kounta then the recipe cost will also have an average cost price - the most accurate pricing you can get!
After selecting the product in the “Products” page this is where you can enter the fixed cost price.
After selecting the product in the “Products” page, you can go to “Inventory” to enter the recipe.
Where can I reset my products' Cost Price?
- In the Back Office, select “Products”
- Select the cogwheel beside the product you want to edit
- Under “Product Info” scroll down until you see “Cost Price”
- Enter or edit the cost price and select “Save”
Pro Tip - The average cost price is updated by Kounta - this is for products that change market value now and again. This average is calculated within a 30-day period. For this to register in the system, the purchase order must be sent via Kounta.
Pro Tip - In cases of change in market price, the purchase order can be edited before it is sent - even though it is auto-populated with data from “Product Info”.
Where can I view the report on my Cost Price and Gross Profit percentage?
- Under “Reports”, select “Sales By”
- This will generate the “Sales By” report. The data can be sorted using the arrows per column. The cost price is in the “cost” column with Gross Profit % right next to it.
How does Kounta calculate Average Cost Price?
An average cost price is derived when you purchase products that change market price every now and then.
Kounta calculates the average price from purchases you made from the last 30-day period to give you a live and always up to date cost price.
Which report do I need to see my Revenue, COGS, and GP%?
You can see all of this information quickly and effortlessly from the Sales By report - even better, you can break this down by product, by category, by user or, by unique reporting tags you can set up yourself.
What if I get stuck?
We're with you every step of the way & our Support is 24/7 - because hospo headaches happen at all hours of the day.
What's my next step?
Keep supplier details in one place for easy reference.
Link suppliers to the stock items you regularly buy to make ordering a breeze.
Create and send purchase orders to suppliers’ emails in less than a minute! Keep these purchase orders in one place - no more lost or redundant orders.
Every time a product is sold (or entered as wastage), automatically update your stock count of how much is left.
Stock counts on Kounta automatically sync with your purchases, sales, and wastage so that inventory management reaches a whole new level of ease.
Managing wastage is a challenge for many businesses in the hospo industry. Track your wastage (the why, who, and how much) and sync your inventory data automatically - so you save time and effort.