Cost of Revenue

This is the cost of everything in the supply chain, from procurement of raw materials...all the way to the point of delivery to customers.

Think about it this way. You make a dollar selling a pencil, and the margin is 13%. That means it cost you $0.87 to produce that pencil. The cost of revenue for the pencil you produced...everything from the wood and graphite to the packaging around it...is $0.87 based on that 13% margin.