COGS

COGS is what it costs to deliver your product to paying customers. In a SaaS company's financials you'll usually see it called cost of revenue. For a tech company it typically includes:

• hosting and cloud - what you pay AWS, Azure or Google Cloud to run production
• third-party software inside your product - licenses and APIs the product can't run without
• customer support and success - the people helping paying customers
• production data storage
• transaction fees - when processing payments is part of what you sell. Card fees for collecting your own subscriptions often go in G&A instead. Follow your company's policy.
• the people running production - DevOps, SRE and on-call engineers keeping the live service up

Engineering goes by what the work does

Not by job title.

An engineer building a new feature is R&D. So is QA testing that feature. That's OPEX, or capitalized as software. The same engineer on call this week, keeping production running, is COGS for that time.

This matters more than it sounds. Put feature work in COGS and your gross margin looks worse than it really is.