Cost Price
Also called: cost of purchase, buying price
What is Cost Price?
Cost price is what an item costs your business before any margin is added. For a retailer it is the purchase price plus the costs of getting the goods onto the shelf; for a kitchen it is the cost of the ingredients in the finished dish.
Why Cost Price matters
Every pricing and margin figure is built on cost price, so an understated cost silently overstates profit across the whole catalogue. The most common omission is freight, and the second is wastage.
How Cost Price works in practice
Record cost against each purchase rather than relying on the last remembered rate, and revisit it whenever a supplier revises prices. Where costs move constantly, a weighted average of recent purchases is steadier than the latest invoice.
Frequently asked questions
Not if you can claim it as input tax credit. If you cannot, the tax is a genuine cost and belongs in the figure.