I provide a service, residential building design. I've never used Cost of Goods Sold because I didn't have a "good" or product to sell and didn't realize I could. I have always recorded items that might be considered COGS as regular expenses. Example, payment to an engineer for work on a specific project. The bottom line was the same regardless.
Now, I am converting my business to selling pre-drawn plans online through publishers, and I want to understand what can be included as COGS. Some items seem obvious, like errors and omissions insurance required by publishers, or amounts paid for photorealistic renderings not done in house. But what other items should I include? Some plans are based on prior work for which I've already been paid, so I can't count my hours for those, but what about hours pertaining just to new plans? I don't pay myself a salary, so how would that work?
