SKU Costing Guide: How to Set the Right Cost for Every Product

Why SKU Costing Matters

Your selling price minus marketplace fees gives you gross margin. But without subtracting your actual product cost, you don't know if you're making money. Inaccurate SKU costs are the #1 reason sellers think they're profitable when they're not.

Components of True SKU Cost

1. Purchase Price — What you pay the manufacturer or wholesaler
2. GST Paid on Purchase — 5%, 12% or 18% input tax — this is recoverable but affects cash flow
3. Packing Material — Polybag, bubble wrap, tape, labels (₹3–15 per unit)
4. Labour — Packing time, quality check (₹2–8 per unit for most categories)
5. Overhead Allocation — Rent, electricity, storage (divide monthly cost by monthly units dispatched)

GST Implications for Sellers

• If you're GST registered, you can claim Input Tax Credit (ITC) on purchases — reducing your effective product cost
• If you're unregistered (composition or exempted), GST on purchases is a real cost — include it in your SKU cost

Example SKU Cost Breakdown — Kurti, ₹180 MRP

Purchase Price	₹110
GST Paid (5% textile)	₹5.5 (recoverable if GST registered)
Packing (polybag + tape)	₹6
Labour	₹4
Overhead allocation	₹8
Total SKU Cost	₹133.5

Setting SKU Costs in TrackEcom

Go to SKU Costing in TrackEcom. Enter your base cost, GST rate and packing cost per SKU. TrackEcom applies these costs to every order P&L calculation automatically — and you can update them with effective dates to track cost changes over time.