Financial Statements

COGS (Cost of Goods Sold)

The direct costs attributable to the production of goods or services sold by a company.

What does COGS mean?

COGS includes raw materials, direct labor, and manufacturing overhead directly tied to producing what you sell. For a SaaS company, COGS typically includes hosting costs, customer support salaries, and third-party software costs. COGS is subtracted from revenue to calculate gross profit. Understanding COGS is essential for pricing decisions and margin analysis. In the UAE, COGS must be accurately tracked for corporate tax deductions.