If you asked most Stripe-powered founders what their best-selling product costs to deliver, they'd pause. Then they'd estimate. Then they'd quietly open a spreadsheet and start adding things up.
This is normal. It's also a problem.
What "cost" actually means for a Stripe business
Cost of goods sold (COGS, or cost of revenue) is the direct cost of delivering your product or service. It's different from operating expenses like salaries and rent. For a Stripe business, it typically includes:
For SaaS:
- Cloud hosting allocated per customer or plan
- Third-party API costs that scale with usage
- Payment processing fees (roughly 2.9% plus 30 cents per transaction)
For ecommerce:
- Cost of goods, meaning what you paid to source or manufacture the item
- Packaging and fulfilment
- Shipping costs not charged to the customer
For services and agencies:
- Subcontractor costs tied to delivery
- Software licences used per client engagement
The flat-fee simplification
For most businesses, the most practical approach is to assign a flat cost per product or price point. Not because your costs are exactly flat, but because averaging them gives you a stable, comparable number you can actually act on.
If your Pro Plan costs between $5.80 and $7.20 to deliver per month depending on usage, using $6.50 as your cost assumption gives you a reliable margin figure to make decisions with. You can revisit it quarterly.
Per-unit and tiered costs
For usage-based products like SMS credits, API calls, or AI tokens, costs are inherently per-unit. Assigning a per-unit cost (for example, $0.004 per SMS) gives you a more accurate margin than any flat estimate.
Some costs are tiered: the first 100 units cost more to deliver than the next 1,000 because of volume discounts from your supplier. Modelling this accurately means your margin calculations improve as you scale.
Start simple
The biggest mistake is not starting because the model isn't perfect. A rough cost assumption tracked consistently is worth more than a precise cost you never use. Start with flat fees, adjust as you learn, and your margin picture will get sharper over time.