Cost of Revenue

What is Cost of Revenue?

Cost of revenue represents the total cost of manufacturing and delivering a product or service to consumers. It includes direct costs like raw materials and labor, as well as indirect costs like shipping and distribution.

Why It Matters

• It is subtracted from total revenue to calculate the gross profit of a business.

• Monitoring this metric helps companies identify inefficiencies in their production or delivery processes.

• It is particularly important for service based companies where traditional cost of goods sold might not apply.