COGS (cost of goods sold)
also: COGS · cost of sales · BOM cost vs COGS
The direct cost of producing the units you sold: materials, manufacturing labor, test, packaging, freight and duties. It is much more than the BOM alone.
BOM cost is the price of the parts. COGS adds manufacturing labor and overhead (often bundled into the contract manufacturer's price), test, yield loss and scrap, packaging and inserts, inbound freight, import duties and other landed-cost items, and, depending on accounting policy, warranty provisions. For a hardware startup, COGS per unit is typically meaningfully higher than the BOM.
Accurate COGS matters for pricing, gross margin and credibility with investors and buyers, who will ask for it.
Founder takeaway
Track COGS per unit as a full landed figure, and reconcile it with actual invoices after each production run.
engineer review pending