cost of goods sold<\/a> is one of the numbers that helps you determine whether you are, at the end of the day, making a profit. If your margins are too narrow, the amount you earn may not be worth the expense. When applied within the PPC context, this metric helps you align your advertising spend with business performance.\u00a0<\/p>\r\n\r\n\r\n\r\nWhat you want to see: <\/strong>Generally speaking, a lower COGS is a good thing. A lower COGS means higher margins, which means greater profits. It also means you have more wiggle room in terms of bidding. However, like with everything on this list, business goals matter. Loss leading pricing strategies, aggressive market expansion or new product developments are all valid reasons to expect and embrace high COGS. Looking at COGS in the context of transactions attributed to a click is one way to evaluate COGS.\u00a0<\/p>\r\n\r\n\r\n\r\nStrategies to deploy: <\/strong>Keeping bid prices low is the major PPC specific element of reducing COGS. However, a large portion of this metric is made up of other business costs \u2014 labour, manufacturing, fulfilment etc. Improving efficiencies across the supply chain is the main way to reduce COGS. If you look at this metric across your entire campaigns, pushing high margin items will increase your total COGS and offset less profitable sales.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\r\n\r\n\r\n\r\nPro tip:<\/strong> COGS calculations delivered by PPC platforms are calculated based on your bidding costs added to the product costs you supply the platform. Make sure to input that information correctly in order to get an accurate score.\u00a0<\/p>\r\n\r\n\r\n\r\n