COGS (Cost of Goods Sold)

The direct costs of delivering your product — the costs that rise with each additional customer.

Example

For SaaS: hosting, third-party APIs per seat, payment fees, and the support directly attributable to serving customers.

Your engineers building new features are usually an operating expense, not COGS. Getting this wrong flatters or destroys your gross margin.

Gross margin — Revenue minus the direct cost of delivering it, as a percentage of revenue.
Operating expenses (OpEx) — The costs of running the business that do not scale directly with each sale — salaries, rent, software, marketing, legal.
Income statement (P&L) — A statement of revenue, costs and profit over a period. Revenue − COGS = gross profit; gross profit − OpEx = operating profit.

Building a chart of accounts — The twenty-odd categories every transaction lands in. Get this right once and every report you ever run is useful; get it wrong and no amount of software helps. (12 min)
Revenue, costs and profit — The three numbers everything else is built on, and the difference between the money that comes in and the money you keep. (10 min)
Gross margin — Why software gets funded and services usually do not, and why a low-margin business cannot grow its way out of trouble. (10 min)
Reading an income statement — The P&L, top to bottom. Fifteen minutes and you will never be lost in an accountant's email again. (12 min)
Fixed and variable costs — The split that decides what happens when you grow, shrink, or have a bad quarter. Most founders classify their own time as neither, and that is where the trouble starts. (11 min)