Freelance Glossary > C > COGS


The concept of Cost of Goods Sold (COGS) is typically associated with businesses that sell physical products. COGS refers to the direct costs incurred in producing and selling those products, including the cost of materials, labor, and manufacturing overhead.

As a result, freelancers who provide services rather than selling physical products typically do not have COGS to worry about. Instead, freelancers may have other types of expenses related to their work, such as equipment, software, marketing, and professional development costs.

However, some freelancers may still have some COGS to consider if they sell physical products related to their services. For example, a freelance photographer who sells prints of their work would need to factor in the cost of materials such as paper, ink, and frames when calculating their COGS.

In general, while COGS may not be relevant to all freelancers, it is still important for freelancers to keep track of their business expenses and understand the various categories of expenses that apply to their work. This can help freelancers to manage their finances more effectively, identify areas where they can save money, and ensure that they are taking advantage of all available tax deductions.

See also: Direct Costs, Expense Category

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