COGS (cost of goods sold)
Costs that exist only because you delivered the sale.
Last reviewed 12 September 2026
For a product company: materials, manufacturing, shipping. For a service company: the delivery team's time, contractors, project-specific tools. For SaaS: hosting, support, payment fees.
The test is simple — if the sale disappeared, would the cost disappear too? If yes, it belongs in COGS. If no, it is overhead.
Frequently asked
What is cogs (cost of goods sold)?+
Costs that exist only because you delivered the sale. For a product company: materials, manufacturing, shipping. For a service company: the delivery team's time, contractors, project-specific tools. For SaaS: hosting, support, payment fees. The test is simple — if the sale disappeared, would the cost disappear too? If yes, it belongs in COGS. If no, it is overhead.
Why does cogs (cost of goods sold) matter for founders?+
The test is simple — if the sale disappeared, would the cost disappear too? If yes, it belongs in COGS. If no, it is overhead.
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