What is Direct Cost in Retail? Explained

Direct costs in retail are the expenses intricately linked to the production or acquisition of goods and services. These costs, directly tied to specific products or services, play a fundamental role in calculating the overall cost of goods sold (COGS). For retailers, direct costs encompass elements like the wholesale cost of inventory, manufacturing expenses, or costs directly associated with providing services. Mastery of direct costs is pivotal for retailers, guiding effective pricing strategies, profit analysis, and comprehensive financial planning within the dynamic landscape of the retail industry.