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COGS Calculator: Cost of Goods Sold Formula for a Practice
The COGS formula is beginning inventory plus purchases minus ending inventory. If a practice starts the quarter with $20,000 of product, buys $75,000 more and counts $23,500 left at the end, cost of goods sold is 20,000 + 75,000 − 23,500 = $71,500. Divide that by revenue to get COGS as a percent of sales. The calculator below does it by product line.
Prepared by Prospyr · Reviewed October 3, 2026 · Free, no sign-up, runs in your browser
Cost of getting product to your door.
Net of refunds. Adds COGS % and gross margin.
Use the same period for every number (a month, a quarter or a year). Values are what you paid, at cost, not what you charge.
Cost of goods sold
$71,900
Goods available for sale
$95,400
beginning + purchases + freight
COGS % of revenue
18%
Gross profit
$328,100
Gross margin
82%
COGS by line
- Neurotoxin
- $29,000 (40%)
- Filler
- $23,000 (32%)
- Retail skincare
- $14,000 (19%)
- Other supplies
- $5,500 (8%)
- Freight in
- $400
A math aid for management reporting. Tax rules for inventory and COGS vary by business; confirm with your accountant.
Cost of goods sold formula
COGS = beginning inventory + purchases (+ freight in) − ending inventory.
Beginning inventory is what you had on the shelf at the start of the period, valued at cost. Purchases are what you bought during the period. Ending inventory is what is left. The IRS (Publication 334) says a business that keeps inventory must value it at the beginning and end of each tax year to find cost of goods sold, and that ending inventory generally becomes the next year's beginning inventory.
Gross profit then equals net receipts minus COGS, where net receipts are sales less refunds and allowances.
Worked example: COGS for a practice, by product line
The tool opens with these placeholder numbers for one quarter.
| Line | Beginning | Purchases | Ending | COGS |
|---|---|---|---|---|
| Neurotoxin | $8,000 | $30,000 | $9,000 | $29,000 |
| Filler | $6,000 | $24,000 | $7,000 | $23,000 |
| Retail skincare | $5,000 | $15,000 | $6,000 | $14,000 |
| Other supplies | $1,000 | $6,000 | $1,500 | $5,500 |
| Freight in | $400 | $400 | ||
| Total | $20,000 | $75,400 | $23,500 | $71,900 |
With $400,000 of revenue, COGS is 71,900 ÷ 400,000 = 18.0% and gross profit is $328,100, an 82.0% gross margin.
COGS percentage and what to do with it
COGS as a percent of revenue is the number to watch. Tracked by product line it shows where cost drifts: toxin that expires before it is used, filler bought in a larger lot than the schedule needs, skincare that sits. A rising percentage with steady prices means cost is growing faster than sales.
Counts are only as good as your records. Prospyr's inventory management tracks product by lot as it is used in a treatment, so the ending count is not a guess. To turn COGS into pricing decisions, see the margin calculator and the markup calculator. Built for med spas.
Frequently asked questions
What is the COGS formula?
Cost of goods sold = beginning inventory + purchases − ending inventory. The IRS lays out the same steps on Schedule C: add the starting inventory to purchases and other costs, then subtract the inventory left at the end of the year. The result is the cost of what you actually sold in the period.
What counts as COGS for a med spa or aesthetic practice?
The cost of products you sell or use up on patients: toxin, filler, skincare you resell, and treatment supplies if you track them as inventory. Rent, marketing and most payroll are operating expenses, not COGS. How you classify provider pay and supplies is an accounting decision, so check it with your accountant.
How do I calculate COGS as a percentage of revenue?
Divide cost of goods sold by revenue for the same period and multiply by 100. $71,900 of COGS on $400,000 of revenue is 18.0%. The remainder, 82.0%, is gross margin.
Why do I subtract ending inventory?
Everything you had and bought is only available to sell; whatever is still on the shelf at the end has not been sold yet. Subtracting it leaves the cost of what left the building. That is why a good count matters: a $1,000 error in ending inventory moves COGS by $1,000.
How often should I calculate COGS?
Monthly is the most useful for a practice, because the percentage shows drift in waste, expired product or price changes while you can still act. Annual COGS is what goes on a tax return, and the IRS says you must value inventory at the beginning and end of each tax year if you keep one.
Should freight and shipping be included?
Many businesses include freight-in, the cost to get product to your door, as part of product cost. The IRS lists freight and similar costs among the items added to purchases when figuring cost of goods sold on the form. Enter it in the freight field or leave it at 0.
What if my ending inventory is higher than what I had available?
The count or the purchases are wrong, because you cannot end with more than you started with plus what you bought. The calculator flags that line. Recount, or check for missing purchase invoices.
Sources and scope
- IRS Publication 334 (2025), Tax Guide for Small Business: chapter 6, Cost of Goods Sold
Describes beginning inventory, purchases, ending inventory and Schedule C line 42, and the requirement to value inventory at the start and end of each tax year.
Management math, not tax advice. Inventory and COGS rules depend on your accounting method and business type; confirm treatment with your accountant. Example numbers are placeholders.