Margins you can
actually trust
Cost of goods sold is one of the most consequential numbers in your financials — and one of the most commonly miscalculated. We value your inventory accurately, calculate COGS using the right method for your operation, and reconcile it all to physical counts.
Inventory numbers that reflect what's actually in your warehouse
When your inventory valuation is accurate and your COGS is calculated using a method that fits how your business buys and sells, your gross margin becomes a number you can make decisions from — not just a figure that appears on a report once a quarter.
This service puts that foundation in place: right costing method, reconciled inventory records, shrinkage and obsolescence accounted for, and reports that show margin clearly at the product and overall business level.
Accurate inventory valuation
Stock on hand valued using FIFO, weighted average, or specific identification — whichever suits your purchasing and sales pattern.
COGS calculated correctly
Cost of goods sold derived from actual purchase costs and inventory movement — not approximated or averaged in a way that distorts margin.
Physical count reconciliation
Inventory records reconciled against physical counts, with shrinkage and obsolescence adjustments properly reflected in the books.
Inaccurate COGS quietly distorts every financial decision you make
Most e-commerce businesses have a rough sense of what their products cost. But there's a gap between knowing your landed cost per unit and having a COGS figure in your financial statements that accurately reflects what you sold, when you sold it, and what those specific units cost you.
That gap matters because your gross margin — and everything calculated from it — depends on COGS being right. Pricing decisions, ad spend thresholds, reorder quantities: all of them get skewed when the cost side of the equation is approximate rather than accurate.
Costing method mismatch
Using the wrong method for your purchasing pattern — FIFO when you're buying in batches at different prices, for example — introduces systematic errors into every period's COGS figure.
Shrinkage not recorded
Returns that don't make it back to sellable inventory, warehouse damage, and obsolete stock all need to be reflected somewhere. When they're not, your on-hand figure overstates your actual asset value.
Records vs. physical reality
System inventory counts drift from physical reality over time. Without periodic reconciliation, the gap widens — and the financials become progressively less reliable.
Inventory valuation and COGS work built for product-based e-commerce
We start by reviewing how you currently track inventory and what purchase data is available. From there, we determine which costing method — FIFO, weighted average, or specific identification — fits how your business actually buys and sells.
We then reconcile your inventory records against physical counts, adjust for shrinkage and obsolescence, and calculate COGS in a way that produces accurate financial statements and supports reliable tax return preparation. Reports are structured to show margin at a level of detail that's actually useful for running the business.
Costing method selection
We review your purchase history and sales pattern to recommend and implement the appropriate valuation method — FIFO, weighted average, or specific identification.
Physical count reconciliation
Inventory records compared against physical counts. Variances investigated and adjusted with appropriate entries — not written off as a single unexplained difference.
Shrinkage and obsolescence adjustments
Damaged stock, unsellable returns, and items past their useful life recorded correctly — reducing overstated inventory balances.
Margin reporting
Reports prepared to show gross margin clearly — at the SKU, product category, or overall business level depending on what's most useful for your decision-making.
What the engagement looks like from start to finish
Inventory valuation work involves more upfront data gathering than our other services. Once that foundation is in place, the ongoing work settles into a predictable periodic cycle.
Data review
We request your purchase records, current inventory system data, and any recent physical count documentation to understand what we're working with.
Method selection
We recommend the appropriate costing method, explain the reasoning, and implement it consistently from that point forward in your books.
Reconciliation and adjustments
Inventory records are reconciled to your physical counts, with shrinkage and obsolescence entries made to bring the books in line with reality.
Ongoing reporting
Reports delivered on a schedule that fits your period-end process — with COGS and margin figures you can rely on for financial statements and tax returns.
Clear pricing for a defined scope of work
Inventory Valuation & COGS Analysis is structured as a project engagement covering the initial assessment, method implementation, physical count reconciliation, and margin reporting setup.
Project engagement. Scope discussed based on SKU count and inventory complexity.
What the pricing reflects
The $1,600 covers the initial engagement — costing method review, reconciliation work, adjustments, and report setup. For businesses with a large number of SKUs or complex multi-warehouse situations, scope and pricing are discussed upfront so there are no surprises.
Ongoing support for periodic reconciliations and updated COGS reporting is structured separately based on the frequency you need — quarterly is common for businesses with moderate inventory turnover.
Well suited for sellers who:
How we track accuracy and measure progress
The outcome of this engagement is measurable: the difference between your system inventory value and your physically verified inventory value should be explainable and documented, not left as an unexplained variance.
COGS accuracy is verified by tracing the cost of units sold back to specific purchase orders or cost layers, depending on the method in use. We prepare reports that show this clearly — so your accountant or tax preparer can follow the logic without guesswork.
Documented variance analysis
Every difference between system and physical counts is explained with an entry — not absorbed into a catch-all adjustment that obscures what actually happened.
Traceable COGS figures
Cost of goods sold can be traced back to specific purchase cost layers. No approximations that become harder to defend at year-end or in a tax review.
Timeline expectations
Initial assessment and reconciliation typically completed within two to three weeks of receiving purchase records and inventory data. Ongoing reporting scheduled around your period-end dates.
What we stand behind
Inventory valuation done properly requires care at each step — from costing method selection through to the final margin reports. We're committed to producing work that holds up under scrutiny and that gives you figures you can actually use.
Method reasoning explained
We walk you through why a particular costing method fits your business — you're not left wondering how your COGS figure was derived.
Scope agreed upfront
We discuss what the engagement covers before work begins. If your inventory is more complex than the standard scope, we address that in the initial conversation.
Introductory call before starting
We review your situation first and confirm this engagement fits what you actually need. No work begins before that conversation.
Reports that travel well
The reports we produce are formatted so your tax preparer or external accountant can follow them without needing to ask us to explain every line.
How to get started
Getting started means a short conversation about your current inventory setup — what platforms you use, how many SKUs you carry, and what your existing records look like. No preparation needed on your end before that call.
Send us a message
Use the contact form — mention roughly how many products you carry and what platforms you sell on. That's enough to start.
Introductory call
We talk through your inventory situation, what records are available, and what the engagement would involve. Usually 20 to 30 minutes.
Work begins
We request your purchase and inventory data, review it, and proceed through costing method selection, reconciliation, and report preparation.
Other services from Nettworth
Accurate COGS pairs well with structured bookkeeping and sales tax compliance.
Your margin numbers should be something you can build on
If your COGS figure is approximate, every decision that relies on it is a little less reliable. Accurate inventory valuation is worth having — and it's not as difficult to put in place as most businesses assume. Let's talk through what it would take for your operation.
Reach out