The percentage of revenue consumed by the cost of goods sold, indicating the profitability of a product or service.
The COGS Percentage, or Cost of Goods Sold Percentage, is a financial metric that measures the proportion of revenue consumed by the direct costs associated with producing or acquiring goods sold by a business. It is calculated by dividing the cost of goods sold by the total revenue and expressing the result as a percentage. The COGS Percentage is a crucial indicator of a company's operational efficiency and profitability. Small business owners can use this metric to assess their pricing strategies, manage inventory, identify cost-saving opportunities, and make informed decisions to maximize their profit margins.