How to Track Cost of Goods Sold (COGS) for eBay Reselling

Item cost is the line that eBay can't fill in for you. eBay knows your sale price and its own fees, but it has no idea you paid $3 at a thrift store or $480 for a pallet. Without accurate cost of goods sold (COGS), every profit number you look at is overstated. This guide shows a simple system that works whether you sell 20 items a month or 2,000.

What counts as cost of goods for eBay sellers?

Include everything you paid to acquire the item and get it ready to sell:

• purchase price,
• sales tax you paid when buying (unless you buy tax-exempt for resale),
• auction buyer's premiums or platform fees,
• inbound freight or shipping to you,
• parts or materials used to repair or refurbish the item.

Don't include outbound shipping labels, eBay fees, or packaging in COGS for profit tracking — those are separate per-order costs. And don't include general overhead like your car or storage unit; those are business expenses that belong on your P&L.

Why does COGS only count items you sold?

If you spend $2,000 on inventory in March and sell $600 worth of that inventory's cost, your March COGS is $600. The remaining $1,400 is still inventory — an asset sitting on your shelves. This matters for two reasons:

• Profit accuracy: subtracting all purchases in the month you buy makes heavy-buying months look terrible and light-buying months look great.
• Taxes: in the US, resellers generally deduct the cost of items when they're sold, not when they're bought. Talk to a tax professional about your specific situation and the inventory method that applies to you.

How do you allocate cost for bulk lots and pallets?

You bought a box of 20 video games for $100. What did each one cost? Two common methods:

1. Even split. $100 ÷ 20 = $5 per game. Simple and fine when items are similar in value.

2. Weighted by expected resale value. Better when values differ widely. Estimate the sale price of each item, then allocate cost proportionally:

If one game will sell for $60 and the total expected value of the lot is $400, that game's cost is $100 × 60/400 = $15. A $4 game would be assigned $1. Per-item profit is now realistic for both.

Whichever method you choose, be consistent and keep the original receipt with a note of how you allocated the cost.

How do you link costs to eBay listings?

The easiest link is the Custom label (SKU) field on your eBay listing. A simple SKU scheme:

• 2610-GW-014 → bought October 2026, Goodwill, item 14
• PAL-0926-A-033 → pallet A from September 26, item 33

Write the cost on the bag or bin label too, so it's visible at listing time. When the item sells, the SKU tells you exactly what you paid.

Where should you record item costs?

Options, from simplest to most automated:

1. Paper or SKU notes — works for very small sellers but hard to report on.
2. A purchase log spreadsheet — one row per item or lot, with SKU, date, source, cost, and allocation method.
3. Profit tracking software — in MyOrderProfit, you add item cost to an item once; every order for that item uses it automatically, and reports show COGS for any date range. Helpers and VAs can add item costs without seeing your profit numbers.

What are common COGS mistakes?

• Forgetting to record cost for "free" items — record $0 deliberately so you know it wasn't missed.
• Leaving out sales tax and buyer's premiums at auctions.
• Expensing an entire pallet the day it arrives.
• Never writing off items that turned out to be broken or unsellable.
• Using a different allocation method each time.

With item cost in place, you can calculate true profit per order and see which sources and categories are actually worth your time.