Cost of Goods Sold
Definition
Cost of Goods Sold: Cost of Goods Sold is the direct cost of delivering your product or service, including hosting, support, and payment processing for SaaS. COGS subtracted from revenue gives gross profit. Lower COGS means higher gross margins.
Example Usage
“Our COGS includes AWS hosting, Stripe fees, and customer support salaries, totaling 25% of revenue.”
Common Misconceptions
Related Terms
Gross Margin
Gross margin is revenue minus the cost of goods sold (COGS), expressed as a percentage of revenue. For SaaS companies, COGS typically includes hosting...
Unit Economics
Unit economics refers to the direct revenues and costs associated with a single unit of a business (a customer, product, or transaction). Positive uni...
Revenue
Revenue is the total income generated from selling products or services before any expenses are deducted. For subscription businesses, revenue is ofte...
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