Example: COGS for a Company That Sells Physical Products If you offer digital services like SaaS, your COGS might include things like web hosting.

If your company offers in-person services like coaching, your COGS/COR/COS might include things like the cost of paying your employees during the time they perform the service. The principle remains the same, however: if the cost is incurred by rendering your service to customers, it’s included here. They might include things like the cost of raw materials that go into the product, the cost of manufacturing labor to assemble the product, and the cost of shipping the product to your customer.įor service businesses, COGS (or more accurately COR/COS) is less obvious – after all, you don’t have raw materials or manufacturing costs. If your business sells a physical product, your COGS are fairly straightforward to identify. It doesn’t include indirect or overhead costs like marketing, or rent for your facilities. This includes everything that goes into actually making the product and delivering it to your customers. COGS: Creating Your ProductĬost of Goods Sold (COGS), sometimes called Cost of Revenue (COR) or Cost of Sales (COS) in businesses that provide services rather than physical goods, covers the money your business spends creating and delivering its product or service. While they both constitute money your business is spending, they include different kinds of costs, and give you different information about the health of your business. The short answer is that no, COGS and OPEX are not the same thing. A common question we get from our CFO services clients is, how are Cost of Goods Sold (“COGS”) different from Operating Expenses (“OPEX”)? They’re both about spending money to allow your business to function are they just two terms for the same thing? Which is which, and why does it matter?

Cogs meaning