What is Cost of Goods Sold?
Cost of Goods Sold
Cost of Goods Sold (COGS) represents the direct costs associated with delivering a startup's software or services to its customers.
Detailed Deep Dive
Cost of Goods Sold (COGS) captures the direct delivery costs of a product. Low COGS are highly prized in software, generating the high gross margins that make SaaS scalable.
Frequently Asked Questions
Q:What is included in SaaS COGS?
Hosting fees (e.g. AWS), third-party API licenses, customer onboarding costs, and customer support salaries.
Q:Why do VCs look for low COGS?
Low COGS lead to high gross margins (e.g. >80%), which is the key driver of SaaS business scalability.
Quick Facts
- CategoryMetrics
- Key ApplicationGross margin calculations and product profitability analysis
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