My Queue

There are no Videos in your queue.

Click on the Add to next to any video to save to your queue.

There are no Articles in your queue.

Click on the Add to next to any article to save to your queue.

There are no Podcasts in your queue.

Click on the Add to next to any podcast episode to save to your queue.

You're not following any authors.

Click the Follow button on any author page to keep up with the latest content from your favorite authors.

Growth Strategies

Need help on determining what the proper cost of sales percentage should be for my firm.

Guest Writer
Entrepreneur, Business Planner and Angel Investor
min read
Opinions expressed by Entrepreneur contributors are their own.
I don't blame you. Everybody wants and needs some sort of standards and guidelines for his or her industry. For packaged software, my industry, I can buy some ratios from a newsletter provider that does an annual survey. I've bought them off and on for years, and some parts of that are useful.

I assume there are similar information providers for IT services. You'd be more likely to know them than I would. Maybe searching for newsletters and industry associations might lead you to where you want to go.  I believe Forrester Research has an IT industry section; it might have your number.

You can get some standard industry ratios in several places. We bundle them with Business Plan Pro. We also get them from Oxxford Info. We used to get them from Integra Information Systems. The Risk Management Association has some of this information, too.

Our legal situation doesn't encourage talking to competitors, but if you can find some similar businesses that don't compete directly, that might help.

By the way, you have your terminology wrong, which will complicate your research. Sales and marketing expenses are different from cost of sales, and referring to them that way, particularly with the COS acronym, will send people off in the wrong direction.

It's not your fault: The usage by accountants and financial analysts is confusing. But cost of sales is direct cost, and sales and marketing expenses are part of running expenses.


More from Entrepreneur

Kathleen, Founder and CEO of Grayce & Co, a media and marketing consultancy, can help you develop a brand strategy, build marketing campaigns and learn how to balance work and life.
Jumpstart Your Business. Entrepreneur Insider is your all-access pass to the skills, experts, and network you need to get your business off the ground—or take it to the next level.
Create your business plan in half the time with twice the impact using Entrepreneur's BIZ PLANNING PLUS powered by LivePlan. Try risk free for 60 days.

Latest on Entrepreneur