Costs of Selling Products or Services (or “COGS”) is a form of accounting used to determine the expenses associated with generating sales. This includes anything from labor and materials to shipping, customer service and returns. COGS helps business owners assess profits by providing insight into the underlying costs associated with bringing products to market. It’s important to note that COGS excludes overhead costs such as rent or marketing expenses. By understanding your COGS, you can identify areas where you can reduce costs and improve profitability.