COGS (Cost of Goods Sold)
The direct costs of producing or delivering a product or service.
COGS includes the direct costs tied to delivering revenue — hosting, payment fees, support or materials. Subtracting COGS from revenue gives gross profit, and the ratio determines gross margin, a key indicator of business-model quality.
Examples
A SaaS firm’s COGS is mostly hosting and support. — Lowering COGS improves gross margin.
How it relates to The Startup Foundry
Margin quality affects Scalability and Business Opportunity scores in your report.