How Do COGS Differ From Cost of Revenue, Operating Expenses, and Cost of Sales?
Posted: Wed Feb 12, 2025 6:05 am
Instead of the cost of goods sold, these businesses have got something called “cost of services”, which doesn’t count for a COGS deduction.
Let’s break down how COGS differs from some other financial terms:
COGS vs. Cost of Revenue
The cost of goods sold is all about physical products. The cost of revenue, on the other hand, is broader. It covers the expense for raw materials, direct labour, shipping, and sales commissions for ongoing services.
Take airlines and hotels. They’re mainly about services, but they also sell portugal phone number list things like gifts and food. Those count as goods, so they can list COGS.
COGS vs. Operating Expenses
Both COGS and operating expenses are about spending money to run your business, but they’re different elements. The former is tied directly to making your product. Operating expenses include things like rent, utilities, office supplies, legal costs, sales and marketing, payroll, and insurance.
You’ll often see SG&A (selling, general, and administrative expenses) listed separately under operating expenses. These are the overhead costs that aren’t directly linked to your product.
Let’s break down how COGS differs from some other financial terms:
COGS vs. Cost of Revenue
The cost of goods sold is all about physical products. The cost of revenue, on the other hand, is broader. It covers the expense for raw materials, direct labour, shipping, and sales commissions for ongoing services.
Take airlines and hotels. They’re mainly about services, but they also sell portugal phone number list things like gifts and food. Those count as goods, so they can list COGS.
COGS vs. Operating Expenses
Both COGS and operating expenses are about spending money to run your business, but they’re different elements. The former is tied directly to making your product. Operating expenses include things like rent, utilities, office supplies, legal costs, sales and marketing, payroll, and insurance.
You’ll often see SG&A (selling, general, and administrative expenses) listed separately under operating expenses. These are the overhead costs that aren’t directly linked to your product.