Membership COGS

[Mitch]

Question, is future voucher redemption considered as COS/COGS when selling a membership? There is this company who ties up with hotels and sells membership. To get their gross sales they are deducting from their revenue on membership sold the tier with room voucher which they will eventually pay the hotel once the voucher is redeemed. Is this considered valid? The hotel gets 25% share from their net sales which is gross sales less of taxes, credit card commissions and mobile app cost. In return the hotel gives a lot of or different types of discounts and complementaries on the member.

 

[Cywolbor23]

Absolutely future voucher redemption should be treated as COGS. If a compan y sells memberships with promises of future discounts, those costs need to be factored into the sales cost calculation. It’s crucial to clearly define how these costs impact the margins