I’m trying to build out a COGS model for my brand I’m building and wanted to ask the Rodeo team—do you include freight-out in COGs? I have seen it both ways, but what’s the best practice?
Fantastic question – and the answer is…it depends! Freight out can be considered a selling expense in some instances, in which case it would not be included in COGS. In other instances, when the expense is only incurred when the product is sold, it would fall under COGS.
"Best practice" would be to have your accountant/CPA review your specific business case, and make the determination of how to book freight for your business.
As it relates to freight, what’s important for you as a business operator is to ensure you are tracking costs over time, and examining if your costs are increasing or decreasing in line with general movements in the freight market. As your business grows, you’ll almost certainly have opportunities for freight optimization via adjustments to your supply chain setup (e.g., opening warehouses closer to clusters of your customers if your products gain traction in certain geographic regions).
Outside of accounting, ensuring you have a system in place to track and regularly analyze your freight costs as early as possible in your company’s development will yield several opportunities for freight optimization as you grow!
Awesome, that’s really helpful. Do you guys know of any outsourced accounting firms? I’m in the market for some support in that area…
We do! We have two great accounting partners listed in our Marketplace—Accountfully and FinOptimal. With either option, you’ll receive an exclusive discount if you contact through our Marketplace.
You can learn more and request an introduction by:
Creating an account on RodeoCPG
Clicking on Marketplace
Filtering by Accounting