Should storage and logistics costs be included in COGS or separated when calculating gross profit, especially for export customers on ex-works terms?

Members consistently include storage and logistics costs in COGS rather than treating them as separate line items on the P&L. The reasoning is straightforward: these costs are inherent to getting product to customers and should therefore be factored into gross margin calculations.

**Key recommendations:**

- **Include in COGS** — Members treat storage and logistics as part of COGS across the board, as the product cannot reach customers without these costs being incurred. - **Use nominal codes or profit centres for visibility** — If you want to see profit differential between channels (e.g. export vs. domestic), set up separate nominal codes or profit centres within your accounting system for import and export stock. This lets you report separately while still including these costs in COGS. - **Handle ex-works carefully** — For export customers on ex-works terms, the same principle applies: calculate and include the logistics cost in your COGS to understand true product profitability, even though the customer will bear the final shipping cost.

**Note:** This approach ensures your gross profit reflects the true economic cost of goods sold, regardless of whether customers are domestic or international.