Working at a PAAS has helped be crystallize the very fundamental difference between Operating Expenses and COGS. These two accounts used forever confused me in college, and when working in a finance department for several years, I'd always blurt out the wrong one when trying to classify an expenditure. From Investopedia:
- Cost of goods sold refers to expenses directly related to the production of a product.
- Operating expenses refer to expenditures that are not directly tied to the production of goods or services, such as rent, utilities, office supplies, and legal costs.
My company is a tool our customers use build the stuff that feeds their family and keeps the lights on. It's connected to their livelihood. I know this because these decisions are not taken lightly, in the way new curtains or kombucha machine in the office is.
When we aren't reliable it affects people's financial security. When they choose us, or in rare cases, choose another solution, this is often obscured, but easily surfaceable.