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Definition
Cost of goods sold (COGS) is the direct cost of what you sold; operating expenses (opex) are the indirect overheads of running the business. COGS sits above gross profit; opex sits between gross and operating profit.
In plain terms
COGS is the cost tied to each sale — materials, direct labour. Opex is everything else it takes to run the place — rent, admin, marketing. The split shapes how you read profitability.
Why it matters for your company
Separating COGS from opex reveals whether a profit problem is in your product economics (COGS, margin) or your cost base (opex, overheads). That diagnosis drives very different fixes — pricing versus cost control.
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