A common question that comes up with founders is COGS versus Operating Expenses (OpEx).  And it is a great question!

This is important to code correctly on your SaaS P&L, so that you can calculate the correct gross margins for your SaaS business.  

Here’s a breakdown of the departments that should be included in your COGS.  Of course, no company is the same.  You have to think about what resources are required to deliver your revenue streams.

Support – this is typically front-line technical support and/or customer onboarding.
Services – professional services to implement, configure, and train customers on your software.
Customer Success – CSM team if they don’t sell (no quota).
Dev Ops – product hosting, third-party products embedded in your software, royalties, etc.

Download the Slides

Download the COGS vs OpEx slides below.