Glossary Term
Cost of Goods Sold (COGS)
Definition
Cost of Goods Sold (COGS) refers to the direct costs incurred in producing and delivering a product to customers. In the MedTech industry, COGS includes expenses related to raw materials, labor, manufacturing overhead, and other costs directly tied to the production of medical devices.
Relevance to the MedTech Industry
COGS is a fundamental financial metric that determines the profitability of medical devices. By understanding COGS, MedTech companies can manage production costs, set competitive pricing, and assess gross profit margins, which are crucial for sustainable growth and investment planning.
Additional Information & Related Terms
Gross Profit Margin Calculated using COGS to determine the profitability of a product.
Bill of Materials (BOM) A detailed list of materials and components contributing to COGS.
Lean Manufacturing A strategy to minimize waste and reduce COGS.
Pricing Strategy Heavily influenced by COGS to ensure competitive yet profitable pricing.