InvoiceBerry Tips for for Freelancers & Small Businesses 9 Most Important Financial Numbers Explained | Page 7

4. Cost of Revenue
The Cost of Revenue helps you to determine what you should
charge on an hourly rate based on what it actually costs you to
produce a product or service. To calculate it:
Raw Materials + Direct Labor + Shipping/Transportation
Costs + Sales Commission = Cost of Revenue
In order to make a profit, your charges should be higher than
your cost of revenue. If it is equal or less than CoR, you should
be charging more.