cost of revenue
Also called: COGS, cost of goods sold
The costs of delivering what was sold, such as video minutes, payment fees and, for a principal, provider payouts. Revenue minus cost of revenue is gross profit.
Cost of revenue is what it costs to deliver what was sold in the period. For a digital service that means hosting and video minutes, payment fees, third-party licenses used per customer and, when the company is the principal, the payouts to the people who deliver the service. In a business that sells goods the same line is called COGS, cost of goods sold.
What stays out are the costs of running the company whatever was delivered: team salaries, marketing, office and tools. Those are operating expenses. Some items sit on the border (customer support, onboarding, payment fees), and companies place them differently. Either choice can be defended; changing it between periods quietly moves gross margin.
Cost of revenue is close to variable cost, but it isn't the same thing. Cost of revenue is an accounting grouping on the P&L; variable cost describes how a cost reacts to volume. Hosting with a fixed monthly plan can sit in cost of revenue, and a commission paid to a sales agent is variable but often sits in operating expenses. For a pricing decision, use variable costs; for reading a P&L, use cost of revenue.
Example
Klasna's cost of revenue for September–November 2026:
That is 1,724,061 ÷ 6,832,760 = 25.23% of revenue. One big number is missing on purpose: the 10,061,190 paid to tutors for 1:1 lessons. Klasna is an agent there and never counted the tutors' share as its revenue, so their payouts aren't its cost either. Teams lessons are Klasna's own service, so their tutors are in.
Common mistakes
- Moving border items between periods. Shifting support or payment fees in or out changes gross margin without changing the business.
- Treating it as variable cost. For pricing and break-even, list the costs that move per unit instead.
- Leaving out small per-customer costs. Fees, AI inference and video minutes add up as volume grows.
- Including the providers' share on an agent's P&L. If it isn't in revenue, it isn't in cost of revenue.
Learn it in the course
- How to read a P&L, top to bottom · How to read a profit and loss statement: revenue, cost of revenue, gross profit, operating expenses, EBITDA and operating profit, and what the P&L doesn't tell you.
- Take rate: what a marketplace really earns · Take rate and GMV vs revenue: why the money families pay is not all Klasna's revenue, and when a company reports the full price instead.
- Case: a board report for a new board member · A board report on the quarter: rebuild Klasna's autumn P&L from raw lines, separate what will repeat from what won't, and back the memo with numbers.