cost-allocation-analysis

To calculate true per-unit profitability, you must allocate all costs including COGS, fulfillment expenses, direct marketing spend, and shared overhead across products and orders to build a detailed cost waterfall.

The best way to allocate shared overhead and marketing costs to individual orders is by distributing them across products and sales channels, which reveals the true per-order profitability rather than just gross margin.

Yes, this cost allocation approach works with Shopify, WooCommerce, and BigCommerce by providing specific instructions and tool recommendations to ensure accurate financial analysis across these platforms.

You build a cost waterfall by sequentially mapping and allocating COGS, fulfillment, marketing, and overhead expenses to specific products and channels, isolating which items generate actual profit after all expenses.

Product profitability analysis often shows misleadingly high margins because it only accounts for COGS, whereas allocating fulfillment, marketing, and shared overhead costs reveals the true per-unit and per-order financial impact.