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Product cost on first orders as a percentage of what those first orders brought in after discounts and refunds.

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Formula

New Customer COGS Net Rate = New Customer COGS ÷ New Customer Net Revenue × 100

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Formula Components

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How It Works

The two halves of this ratio are dated differently, and that drives most of its behavior. The numerator follows the order. New Customer COGS is calculated per line item on each customer’s first non-cancelled order and dated by when the order was placed. For each line item, Upstack uses the first unit cost it finds:
  1. A product cost you set in Cost Settings that covers the order date.
  2. The cost per item from Shopify that applied on the order date.
  3. Your Default COGS % of the item’s price.
A line item with none of these has no cost, which makes the rate look better than it is. Setting a Default COGS % closes that gap. COGS uses the quantity ordered. When a first order is refunded, its product cost stays in the numerator. The denominator follows refunds. Net revenue subtracts new-customer refunds, and by default refunds are dated by when Shopify processed them. A refund on a December first order processed in January lowers January’s net revenue but not January’s COGS. You can switch a dashboard view to the original order date from the dashboard options menu, under Refunds.

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Example

A gift brand acquires most of its new customers in December. Many December gifts come back in January. January’s jump to 41.9% isn’t a cost problem. $7,740 of refunds on December first orders were processed in January and came out of January’s net revenue. On original order date, those refunds move back to December, and the picture reverses: December’s first orders were the costlier ones once returns are counted.

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How to Interpret It

100 minus this rate is the ceiling on first-order CM1 %. New Customer CM1 % also subtracts other COGS lines from Cost Settings, so it can only be lower. A rising rate means first orders keep less margin after product cost. The usual causes are deeper welcome discounts, more refunds, a shift toward lower-margin products in first carts, or a supplier cost change. Check New Customer Discount Per Order and New Customer Refund Count before blaming costs. Compare with returning customers. Returning Customer COGS Net Rate is the same ratio for repeat orders. Welcome discounts shrink first-order net revenue, so a gap between the two is expected. The question is whether repeat orders earn it back. A sudden drop can be missing costs. New products without a product cost, a Shopify cost per item, or a Default COGS % add revenue with no COGS.

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FAQ

Discounts and refunds shrink the denominator, but refunded items keep their product cost in the numerator. Both push the rate up compared with a list-price margin.
From product costs you set in Cost Settings, then Shopify’s cost per item, then your Default COGS %. Upstack uses the cost that applied on the order date.
On the default refund-date setting, refunds on the earlier month’s first orders reduce the later month’s net revenue. Switch the view to original order date to tie them back.
See all COGS metrics →