Cost of Goods Sold (COGS) is one of the basic components of running a service-based business, and it refers to the direct costs associated with producing goods that are sold. This includes both variable costs such as labour and materials, as well as fixed costs such as shipping and storage. Knowing your COGS can help you determine the breakeven point for your business, as well as steer pricing decisions, ensure profitability, and effectively manage cash flow. In other words, without properly accounting for COGS, you won’t know if your business is making money or not!