COGS

COGS is the direct cost of producing or acquiring the products a business sells — materials, manufacturing, and direct labor, but not marketing or overhead.

COGS is the number subtracted from revenue to get gross margin. For a physical product business it typically includes raw materials, manufacturing, and inbound freight. For a digital or service business, the equivalent is often called cost of revenue and might include hosting, payment processing, or support costs directly tied to delivering the service.