CORE is an acronym for COGS, OPEX, Revenue and Earnings. As a CTO, understanding fundamental financial metrics helps you align your technology decisions with business objectives. Here are four key terms you should know: ## [[COGS]] **(Cost of Goods Sold)** – This represents the direct costs of delivering your product or service, such as cloud infrastructure, third-party API costs, and customer support directly tied to usage. Lowering COGS improves **gross margin**, a key profitability measure. ## [[OPEX]] **(Operating Expenses)** – These are the costs of running the business that aren’t directly tied to production, such as salaries (including engineering teams), office space, and marketing. Managing OPEX effectively ensures sustainable growth. ## [[Revenue]] The total income generated from customers. For SaaS companies, this includes subscription fees, licensing, and usage-based charges. Growing revenue while keeping COGS and OPEX in check leads to higher profitability. ## [[Earnings]] **(Net Income or Profit)** – What remains after subtracting COGS, OPEX, and other costs (e.g., taxes, interest). Positive earnings mean a profitable business, while negative earnings indicate a need for adjustments in spending or revenue strategies. # Why this matters for the CTO **Tech Spending Impacts Margins** – Decisions on cloud architecture, licensing, and engineering team size affect both COGS and OPEX. **Scalability Affects Profitability** – Inefficient systems can drive up COGS, reducing overall margins. **Investment in Tech Needs Justification** – Demonstrating how tech initiatives contribute to revenue or cost savings strengthens your case for funding.