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Calculating your Cost of goods with Lightspeed

Cost Price & Average Cost Price

Your cost of goods 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.

No matter how you track your inventory, Lightspeed works seamlessly with purchasing, tracking wastage, regular stocktakes or recipes for each product.


 Lightspeed provides you with real-time data to help you grow your business and reduce costs.



What’s in this guide?

What are COGS?

How does Lightspeed calculate your COGS?

Cost price with recipes

Average cost price from Purchases 

Fixed cost price

Reporting on sales revenue, cost price & gross profit %  


What are COGS?


Your COGS (Cost of goods sold -we always love a good acronym) is the total amount you've spent on products (stock) in the course of selling.

It's important to track how much cost you're incurring for a given amount of sales, obviously spending more than you earn is bad business.

 Lightspeed allows you to track your COGS using a few different methods, depending on how much time you're willing to invest in managing costs and inventory.

  • If you are preparing products 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 labour costs or other overhead expenses.

When we talk about COGS, Gross Profit also gets a mention.
Gross Profit is the money remaining from your revenue (sales) after you have paid for your products.





How does Lightspeed calculate your COGS?


We work with you to give you the level of granularity you need to track your costs across your business depending on which inventory functionality you are using with Lightspeed.

When you make a sale, we capture the cost of the product or the cost of any ingredients involved in making the product, then we record that information alongside the sales information.

This allows us to tell you your Gross Profit and enables you to properly track your profitability.

There is some pretty smart logic we use in calculating the cost of an item since we know you're data isn't always going to be 100% up to date (recipes for Coffees etc)


Pro Tip - Even ingredients can have their own recipes - eg for sauces or stocks made in-house and used for other recipes.


Note - Cost prices on Lightspeed can show up to 4 decimal places.


1. Cost Price with Recipes


If you have a recipe for your product, then this is the first preference Lightspeed will use to calculate the cost price.

Naturally, your components (ingredients) will need their own recipe, purchase history or fixed cost price. 

If you need some help getting your recipes added, then you can read our guide on managing recipes.





2. Average Cost Price from Purchases


If you are still placing your orders via text message, phone call or carrier pigeon - welcome to the 21st century. Purchase not only has a wide range of time and cost saving benefits it will also calculate your cost of goods for you - goodbye calculators.

Whether you are ordering milk daily or wine twice a year, Lightspeed will calculate the weighted average of your purchases for each product from the last 30 days of purchase history for that specific product.

You can see this average cost price at any given time from the product info page - just below the fixed cost price field.




3. Fixed Cost Price


Just want to keep it short and sweet? If you are not using recipes and, not purchasing with Lightspeed, then you can set a fixed cost price for each product you sell.

Better yet, when your supplier prices change simply jump back into the product info page and update - any cost price changes will only affect future sales.

You can also bulk add or update products and their cost prices with a simple .CSV.


1. From the Products page in Back Office


2. Select the cogwheel beside the product you want to edit



3. Under Product Info scroll down until you see Cost Price


4. Enter or edit the cost price and select Save




Reporting on sales revenue, cost price & gross profit %


You can quickly and easily report on your sales revenue, cost price & gross profit % all from our Sales By report.

Even better, you can filter this report down by product, by category, by user or, by unique reporting tags you can set up yourself.




What's my next step?


Start the ball rolling by adding in your supplier details ready to place your first order.


Create and send purchase orders to suppliers in less than a minute! Keep these purchase orders in one place - no more missing invoices.


Once you've got your cost prices sorted and, started purchasing, then you might want to check out our guide on stock counts with Lightspeed - quickly get a grasp on one of your biggest business costs with a regular stocktake.


Frequently Asked Questions

Why are my COGs not displaying on Insights?

First, ensure you have entered the Cost price for the products. If you still cannot see the COGs, it could be because you have not yet Sold or Recieved the product. For a product that’s cost price relies on a recipe, it won’t have a cost price associated with it until it’s been received.

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