Cost of goods sold (COGS) is an essential expense that must be considered when running a business. It’s a measure of the total cost of producing, sourcing, and preparing items for sale to customers. The cost can include everything from the raw materials used in creating products to labor and shipping fees. Every business that produces goods or services to sell needs to factor in COGS to calculate how much money they make on each product sold. Knowing your COGS is key to understanding your bottom line!