What is SG&A expense?
Selling, general and administrative (SG&A) expense is the combined non-production cost of running and selling the business. On most income statements it sits below gross profit and is subtracted (along with other operating costs such as R&D when reported separately) before operating income. Filers often show one line for SG&A; some break out sales & marketing or general & administrative detail in the footnotes.
SG&A is not the same as cost of goods sold (COGS): COGS is tied to producing or acquiring what the company sells; SG&A is overhead, go-to-market, and corporate support. That distinction matters for gross vs operating margin.
What usually sits inside SG&A
Reporting labels vary, but SG&A typically rolls up three buckets:
- Selling — sales compensation, advertising, promotions, trade shows, and other demand-generation spend.
- General — rent and utilities for non-factory space, insurance, facilities not tied to production.
- Administrative — executive and finance teams, legal and audit fees, HR, IT that supports the whole company.
Companies in the same industry can classify similar costs slightly differently; when you compare SG&A across peers, read the filing notes if ratios look out of line.
SG&A as a percentage of revenue
A standard efficiency metric is SG&A divided by revenue — how many cents of every sales dollar go to overhead and sales before other operating lines:
SG&A % of revenue = SG&A expense ÷ Revenue
Comparing that ratio across peers and over time shows whether the business is scaling sales faster than overhead, or whether costs are creeping up without revenue growth. Industry norms differ widely: asset-light software can run high sales & marketing as a share of revenue; heavy manufacturing often shows a lower SG&A share because more spend sits in COGS.
SG&A vs operating expenses and R&D
Operating expenses (below gross profit, before operating income) usually include SG&A plus anything else the company classifies as operating but not as COGS — commonly research and development when R&D is broken out on its own. So SG&A is often a subset of operating expenses, not the whole picture.
Treating R&D as investment vs overhead is a separate judgment: high R&D with disciplined SG&A can look very different from high SG&A alone. Operating margin captures the net of all those operating lines; see profit margin explained for how operating margin is built from gross profit.
SG&A vs COGS — where gross profit stops
COGS is directly tied to producing or purchasing goods and services sold: materials, direct labour, manufacturing overhead allocated to output, wholesale cost of goods for retailers. SG&A is everything else on the operating side that is not capitalised into inventory under the firm's accounting policy.
Gross margin is (Revenue − COGS) ÷ Revenue. SG&A then helps explain how much of that gross profit survives as operating income — which ultimately feeds earnings per share after interest, tax, and other items below the line.
Related concepts and tools
- Gross, operating & net profit margin explained — where SG&A sits on the path from gross profit to operating income.
- EPS explained — net income after all operating and non-operating lines, divided by shares.
- Profit margin calculator — gross margin from revenue and COGS for any ticker.
- Top companies by revenue — the denominator for SG&A ratios.
On individual tickers, income-statement data and visualisations that include SG&A appear in each company's hub — start from Companies.