Business & Sales

What Is Cost of Goods Sold (COGS)?

Cost of goods sold (COGS) is the direct cost of producing or purchasing the goods a business sold during a period, such as materials, direct labor, and inventory purchase costs. It excludes indirect costs like marketing and rent. Revenue minus COGS equals gross profit.

Formula

COGS = beginning inventory + purchases during the period − ending inventory.

Example

Starting inventory of 10,000, purchases of 25,000, and ending inventory of 8,000 give COGS of 27,000.

🧮 Calculate It Yourself

Put Cost of Goods Sold (COGS) into practice with these free calculators — no sign-up, nothing stored.

🏷️ Markup & Margin Calculator Find your selling price, or check your real profit margin. Calculate → 📊 Break-Even Point Calculator How many units do you need to sell before your side business profits? Calculate →

🔗 Related Terms

Gross Profit Operating Expenses Profit Margin Variable Costs

More Business & Sales Terms

📖 Browse all glossary terms or explore all free calculators.

Last updated: September 27, 2026. This definition is for general educational purposes only. It is not financial, investment, tax, legal, or medical advice, and it does not recommend any product or course of action. For decisions about your own situation, consult a qualified professional.