> The term cost of revenue refers to the total cost of manufacturing and delivering a product or service to consumers. [0]
It sounds like "developing the core product" falls entirely under this bucket, so with what others are saying about what falls under other buckets is right, then the one that looks most cuttable to me is actually "Research and Development". That sounds like the "experimental new stuff that may go nowhere" bucket, and if it's eliminated it would also put them just above break-even. Maybe they could focus on improving profits for their core product for a while before bringing that back.
Maybe there is necessary stuff included in it though, which I guess means that wouldn't be an option.
All tech companies put most of their engineering under “research and development”. It lets you capitalize your expenses and smear them out over many years.
Kinda, they can classify the activity of the engineers project work as r&d, and capilise the appropriate amount on the balance sheet (i.e. does not show under r&d expenses). Over time that would then be shown as depreciation, not r&d. You can't captilise an engineers time that is maintenance work.
A quick look at Ubers annual report states they do not capitalise r&d costs and instead expense it as incurred.
If you look at their financials, they show gross bookings, which include both the full billed values for food and delivery, and transportation of people. Revenues only show their share of that total.
In regards to incentives, it looks like a complicated question, I found an interesting outline[2]
Cost of Good Sold is the variable cost most directly associated with bringing in the revenue. So the raw materials for making a physical product, or the salaries paid to service workers who are billed out hourly. Anything that is strictly mandatory to create the product or service.
Cost of Revenue goes a step further, and includes the next layer of costs that are necessary to cause sales to happen for a given product/service line in a reporting period. That includes things like sales and marketing, and distribution. Basically anything that would cause the revenue to stop coming in fairly immediately if it wasn't done.
Neither includes R&D to create the product/service in the first place, or general overhead.
