How to Track COGS Across Multiple Sales Channels
Selling on Etsy, Shopify, or both? Your COGS doesn't care which platform the order came from — but your tracking system needs to. Here's how to get one consolidated number.
You’re selling on Etsy. You’re selling on Shopify. Maybe you’ve got a Faire wholesale account going too. Business is moving.
Then tax time arrives — or you just want to know which products are actually making you money — and you hit a wall. Etsy shows you revenue from Etsy. Shopify shows you revenue from Shopify. Neither one tells you what those sales cost you to produce. And combining them into one COGS figure? That’s a whole spreadsheet project you didn’t plan for.
This is the reality for most makers who expand beyond their first sales channel. Your COGS doesn’t care where the order came from. But the way most platforms report — and the way most makers track — makes consolidated cost accounting almost impossible without a dedicated system.
Here’s how to get it right.
Why Platform-Native Reporting Won’t Give You COGS
Why platform dashboards miss the point
Etsy’s seller dashboard shows your revenue, fees, and net deposits. Shopify’s analytics show orders, gross sales, and net sales. Both are genuinely useful for channel-level revenue tracking.
Neither one knows what your products cost to make.
That’s not a flaw — it’s just what those platforms are built for. They’re order management and payment systems, not manufacturing cost trackers. They don’t know you sourced your beeswax from a supplier at $12.40/kg, that each candle uses 180g, or that you batch-produce 40 units at a time with 90 minutes of labour spread across them.
COGS — the actual cost of goods sold — requires knowing:
- The materials consumed to make each unit
- The labour involved in production
- Any overhead that goes into the product (packaging, shipping materials, manufacturing supplies)
No sales platform captures that. They see the sale; they don’t see the production.
What goes wrong when you track COGS per channel
Once you’re on two or more channels, the temptation is to calculate COGS separately for each one. Pull your Etsy orders, work out your materials costs, get a COGS for Etsy. Do the same for Shopify.
The problem: you’re not making two different products. You’re making one product and selling it in two places.
Double-counting materials. If you buy 2kg of shea butter and it goes into batches that fulfill both Etsy and Shopify orders, splitting that purchase across two tracking systems creates accounting headaches. Which channel gets the expense? How do you split a supplier invoice?
Inconsistent recipes. Without a single source of truth for your product recipe, it’s easy to end up with slightly different cost calculations for “the same product” across two tracking systems. Maybe your Etsy tracking uses an outdated material price. Maybe your Shopify spreadsheet has the labour rate wrong. A 10% discrepancy in your cost calculation means a 10% error in every profitability decision you make.
Impossible consolidated view. At year end, you need total COGS across your whole business — not Etsy COGS plus Shopify COGS, duct-taped together. Schedule C (for US sole proprietors) asks for one number. So does your accountant. Getting there from two siloed spreadsheets is painful.
The fix: one recipe that applies everywhere you sell
The cleanest solution is a single recipe or bill of materials (BOM) for each product you make, maintained in one place, that feeds COGS calculations regardless of which channel the sale came through.
Here’s what that looks like in practice.
Your soy candle has one recipe: 180g soy wax, 15ml fragrance oil, one jar, one lid, one label, 12 minutes of your time. That recipe has one cost: let’s say $8.40 in materials plus $3.00 in labour at your target rate. Total production cost: $11.40 per candle.
When a candle sells on Etsy, the COGS for that sale is $11.40. When one sells on Shopify, the COGS is still $11.40. The channel doesn’t change what it cost to make the thing.
What changes per channel is your net revenue — because Etsy’s fee structure is different from Shopify’s. But that’s a margin calculation, not a COGS calculation. COGS is about production cost. Keep them separate in your head (and your books), and the multi-channel tracking problem becomes much more manageable.
A bill of materials or recipe record is the foundation. Once you have that, you can attach it to any order from any channel and always get consistent cost figures.
Allocating shared overhead across channels
Some costs sit above the per-unit level. Packaging tape, bubble mailers, tissue paper, heat shrink wrap for bundles — these aren’t in any single product recipe, but they’re real costs of running your business, and they show up in your COGS.
The standard approach is to track them as overhead and allocate them proportionally.
By unit volume. If you ship 60% of your orders through Shopify and 40% through Etsy, allocate your monthly packaging supply spend 60/40. Simple, reasonably accurate.
By revenue. Some makers prefer to allocate overhead proportionally to revenue instead of units. This works if your products have similar packaging needs regardless of price, but can distort things if you sell products at very different price points across channels.
By order count. If your overhead costs are more related to “how many packages did I ship” than “how many units were in them,” order count is a fair basis.
None of these methods is perfect. The goal is consistency — pick one method and stick with it so your numbers are comparable period over period.
Platform fees and payment processing are not typically included in COGS for accounting purposes. They’re selling expenses, sitting below gross profit on your P&L. Don’t mix them into your per-unit cost calculations — it muddies both your COGS and your channel profitability analysis. (Understanding channel-specific margins by including fees is genuinely useful for decision making — just keep it separate from your accounting COGS. There’s more on the channel-fee side of this in multi-channel COGS tracking for Etsy and Shopify.)
Year-end COGS roll-up when you have two or more revenue streams
This is where multi-channel makers tend to feel the most pain. At the end of the year, you need total COGS across your whole business. Here’s how to think about it.
COGS = beginning inventory + purchases − ending inventory
That formula applies to your whole business, not per channel. Your beginning inventory is the total value of all finished goods and raw materials on hand at the start of the year. Your purchases are all raw material and supply purchases across the year, regardless of which channel the resulting products will be sold through. Your ending inventory is everything left on hand at year end.
If you’ve been tracking production costs through a single recipe system (rather than per-channel spreadsheets), this roll-up is relatively straightforward. You’ve manufactured X units at Y cost each. Some sold through Etsy, some through Shopify, some are still in stock. The total COGS for the year is the production cost of the units that actually sold.
The channel split matters for revenue reporting — you’ll likely report Etsy income and Shopify income separately, or at least keep them distinct in your records. But COGS rolls up as one number.
What your accountant actually needs. For Schedule C filers in the US, Part III covers cost of goods sold. It asks for inventory values (beginning and end), purchases, and any other costs of goods. You’re not asked to break COGS out by channel. One total COGS figure for the year is what’s required. That’s good news — it means your consolidated tracking is exactly what the tax form wants.
If you’re running a more complex structure (multi-member LLC, S-Corp, or similar), your accountant may want channel-level P&Ls as well. But the COGS calculation itself remains a single business-wide figure.
Schedule C implications for multi-channel makers
For US makers filing as sole proprietors, Schedule C is where your business income and expenses live. A few things to know about how multi-channel operations affect this.
Income. You report your total gross business income — that includes all channels combined. If Etsy deposited $18,200 and Shopify deposited $9,800, your total gross income is $28,000 (before fees and COGS). Keep your 1099-Ks from each platform; they’ll reconcile to these figures.
COGS. As covered above, this is a single total for Part III. Your materials purchases, labour (if paid to others — your own time is not deductible as labour on Schedule C), and applicable overhead costs go here.
Selling expenses. Platform fees, payment processing fees, and advertising spend are deductible business expenses — but they go in Part II, not Part III with COGS. This distinction matters: COGS reduces your gross profit, while selling expenses reduce your net profit. They’re both deductible, but they sit in different parts of your return and affect different financial metrics.
The practical issue. Most multi-channel makers find that the income side is easy — your platforms send 1099-Ks. The COGS side is hard, because you need a year’s worth of production cost data that no platform provides for you. That’s the gap a tool like Craftybase fills: it tracks what you made, what went into it, and what it cost, so when you (or your accountant) sit down to fill out Part III, the number is there.
Putting it together: a practical system
Here’s what a workable multi-channel COGS tracking setup looks like for most makers.
One place for recipes. Every product you sell has a recipe or bill of materials stored in one system. Material costs in that recipe update whenever your supplier prices change. Recipe costing software built for makers handles this automatically; doing it in spreadsheets is possible but requires manual upkeep.
All channels connect to one inventory record. When an order comes in from Etsy, it draws down your finished goods inventory. Same for Shopify. You’re not managing two inventory pools — you have one stock of products that gets allocated to orders from any channel.
Manufacturing records track what you produce. Every production run is recorded: what you made, how many, what materials went in, and when. This is how you build the inventory that feeds both channels.
Overhead tracked monthly. Packaging supplies and other shared overhead costs get recorded monthly and allocated to COGS using your chosen method (unit volume, revenue, or order count).
Year-end report pulls it all together. At year end, your total COGS for Schedule C comes directly from your manufacturing records — total units produced times production cost minus ending inventory. No spreadsheet archaeology required.
Craftybase is built around this workflow: connect your Etsy and Shopify stores, enter your recipes, record your manufacturing runs, and let the system track COGS across all your channels from a single source of truth. The COGS report pulls together what you need for tax time, and the per-product cost data is always current regardless of which channel your orders come through.
Frequently Asked Questions
Do I need to calculate COGS separately for each sales channel?
For tax purposes, no. Schedule C asks for one total COGS figure covering your entire business — not a breakdown by channel. Tracking COGS per channel is useful for decision-making (understanding which channel is most profitable after fees), but your tax return and formal accounts treat COGS as a single business-wide number.
How do platform fees fit into COGS for a multi-channel seller?
Platform fees — Etsy transaction fees, Shopify monthly costs, payment processing — are selling expenses, not COGS. They sit in Part II of Schedule C, below gross profit. COGS covers production costs only: materials, direct labour, and allocated manufacturing overhead. Mixing fees into COGS overstates your cost of production and distorts your gross profit margin.
What is the right way to allocate overhead costs across multiple sales channels?
Three common methods work well for small makers: allocate by unit volume (proportional to how many units each channel sold), by revenue (proportional to each channel's share of total sales), or by order count (if packaging costs are more per-shipment than per-unit). Pick one method and stick with it consistently — the IRS cares more about consistency and reasonableness than which method you choose.
Can I use Craftybase if I sell on both Etsy and Shopify?
Yes — Craftybase connects to both Etsy and Shopify simultaneously. Orders from both channels sync into a single inventory system, drawing down finished goods from the same stock. Your recipes and production runs apply equally to both channels, so your COGS calculation is always based on one consistent record rather than two separate spreadsheets. You get one COGS figure that covers your whole business.
How does multi-channel selling affect my Schedule C filing?
Multi-channel selling primarily complicates the income side of Schedule C — you'll receive 1099-Ks from each platform separately and need to reconcile them to your total gross income. COGS itself (Part III) remains a single business-wide figure regardless of how many channels you sell through. Keep records of each channel's gross income and your total production costs, and the filing is straightforward.
What if my product recipe is the same across channels but I offer different bundles on each?
Bundles just need their own recipe — a parent recipe that references the component product recipes. If your Shopify store sells a gift set of three candles, create a bundle recipe that points to three individual candle recipes. Craftybase calls these subassemblies: each component has its own production cost, and the bundle's COGS is the sum of its parts plus any bundle-specific materials (extra packaging, ribbon, etc.).
If you’re selling across Etsy, Shopify, and other channels, the biggest COGS mistake is treating each platform as its own tracking system. Your production costs are unified even when your sales aren’t. A single recipe per product, one inventory pool, and a consolidated manufacturing record is what keeps your numbers clean — and makes tax time something you can actually prepare for rather than survive.
Craftybase is built for exactly this: connect your channels, enter your recipes, track your production, and get one accurate COGS number for your whole business. Start a free 14-day trial — no credit card required.
