Before I had my own businesses, when accountants and nerds started talking about stuff like cost of sales and operating costs, I took it as my cue to nod off and drool on my shirt. It sounded boring. I had better things to do… like watching paint dry.
I was wrong!
There’s nothing boring about profit.
Knowing the costs of sales (also called the cost of goods sold or direct costs) is vital to determine your gross profit. You also have to understand how your operating costs (also called overheads or indirect costs) are different and how it affects your net income.
Check out this week’s short video to discover the simple but important relationship of these costs in determining your profit.