If you run a store doing real volume, this question stops being academic the moment you try to reconcile your own numbers against your Shopify payouts. You see "operating expenses" in one place, "SG&A" in another, and you want to know whether you're double-counting. You're not — one contains the other.
The one-line answer, then the nuance
Operating expenses are the whole category. SG&A is a named group inside it. Ramp's breakdown puts it plainly: SG&A expenses are a subset of operating expenses, not synonymous terms, and operating expenses can include SG&A alongside R&D, depreciation, and amortization.
So the relationship is: operating expenses = SG&A + R&D + standalone depreciation/amortization + any other non-COGS operating cost.
The reason the two words get used interchangeably is that most small stores have no R&D department and fold depreciation into one line. When those extra slices are zero, operating expenses collapse down to just SG&A. That's why a POD operator can run for years treating them as the same thing and never get burned — right up until they model a scenario where the distinction matters.
Where both sit on the income statement
Think of the income statement as a waterfall. Each layer gets subtracted from the one above it.
- Revenue — what customers paid you.
- Minus COGS (cost of goods sold) — the product cost and fulfillment your supplier charges per unit.
- = Gross profit.
- Minus operating expenses (this is where SG&A lives) — marketing, apps, software, payment fees, your own pay.
- = Operating income (also called operating profit or EBIT).
The critical boundary is the line between COGS and operating expenses. COGS is the cost of making and delivering the specific units you sold. Everything else it takes to run the shop — the ad spend, the Shopify bill, the email tool — is an operating expense, and nearly all of it is SG&A. If you want to go deeper on what belongs above that line versus below it, the question of whether net revenue includes cost of goods sold walks through the same boundary from the revenue side, and recording cost of goods sold covers the mechanics of booking those unit costs correctly.
What actually counts as SG&A for a POD store
Per Ramp's list, SG&A clearly includes executive salaries, marketing, sales commissions, office rent, legal and accounting fees, IT costs, and office supplies — and clearly excludes raw materials, direct production labor, factory rent, freight-in, and packaging, which all live in COGS.
Translated to a one-person Shopify POD shop, your SG&A is basically:
- Marketing / ad spend — your Meta and Google budgets. This is the biggest SG&A line for most stores.
- Platform and apps — your Shopify subscription, theme, and app stack.
- Email and retention tools — your Klaviyo bill.
- Payment processing fees — the per-transaction cut (classification varies; some stores break this out as its own line).
- Your own pay and misc overhead — design software, a home-office allocation, accounting help.
What is not SG&A: the per-unit cost your supplier charges to print and ship the item. That's COGS. The FIFO method of calculating cost of goods sold is one way to nail that unit cost down, and reducing shipping costs in D2C fulfillment attacks the other half of it.
Worked example: watch SG&A equal operating expenses
Say you run a store doing 340 orders a month at a $31 average order value, with $2,800/month in Meta spend. Here's the waterfall.
Revenue: 340 × $31 = $10,540.
COGS — your supplier charges $12 product + $5 shipping = $17 per order: 340 × $17 = $5,780.
Gross profit: $10,540 − $5,780 = $4,760.
Now operating expenses. For this store they are:
- Meta ad spend: $2,800
- Shopify + apps: $115
- Klaviyo: $45
- Payment processing (about 2.9% of revenue plus $0.30/order): $306 + $102 = $408
- Software + misc overhead: $60
Total operating expenses: $2,800 + $115 + $45 + $408 + $60 = $3,428.
Operating income: $4,760 − $3,428 = $1,332.
Here's the punchline. This store has no R&D line and no separate depreciation line. So every dollar of that $3,428 is SG&A. For this business, SG&A is total operating expenses — not because the two terms mean the same thing, but because the other slices happen to be zero. The day you capitalize a custom app build or start paying a contractor to develop new product lines, an R&D-flavored cost appears, and your SG&A would then be less than your operating expenses.
Why the split actually matters to your profit
If the two numbers are usually equal, why care? Three reasons that hit operators directly.
1. Benchmarking. SG&A as a percentage of revenue is a standard health check, and the right benchmark depends on which bucket you're measuring. Ramp cites a typical retail range of 20–30% of revenue for SG&A, with a U.S. cross-industry average of 14.3% of revenue in 2025. In the example above, SG&A of $3,428 on $10,540 revenue is about 33% — on the high side, driven almost entirely by ad spend. If you'd lumped COGS into "expenses," that ratio would be meaningless.
2. Finding the fixable cost. COGS is mostly set by your supplier. SG&A is where your decisions live — ad efficiency, app bloat, subscription creep. Separating SG&A out tells you which costs you can actually cut this week versus which require renegotiating with Printify or Printful.
3. Per-order truth. Operating income divided by orders is your real profit per order. In the example, $1,332 ÷ 340 = about $3.92 of true profit per order — a very different story than the $14 gross margin per order ($4,760 ÷ 340) you'd see if you stopped at gross profit. Stores that only track gross margin feel rich and run out of cash.
Let Victor keep the split straight
Reading this waterfall by hand every month is where most operators give up — the numbers live in Shopify, in Meta Ads Manager, in your supplier portal, and in your payment statements, and they never reconcile on their own.
Victor, the AI employee from PodVector AI, pulls your live Shopify, Meta Ads, Google Ads, Printify, Printful, Gelato, and Klaviyo data into one place and computes your true per-order profit — COGS below the line, SG&A where it belongs, operating income at the bottom. Victor can deliver that as a report to your Google Drive, and every write action is approval-gated, so nothing happens until you say go. Victor is not a dashboard you have to go read; it's an operator that does the reconciliation for you. Put Victor to work on your store and stop guessing which bucket a cost belongs in.
For the bigger picture of how all these cost buckets fit together, the ecommerce ops economics hub ties the full margin stack together.
FAQs
Is SG&A included in operating expenses?
Yes. SG&A sits inside operating expenses as one of its main components. Operating expenses is the parent category — every non-COGS cost of running the business — and SG&A (selling, general, and administrative) is the largest slice of that for most retailers, alongside R&D and depreciation.
Does SG&A include COGS?
No. SG&A and COGS are on opposite sides of the gross-profit line. COGS is the direct cost of producing and shipping the units you sold — for POD, that's your supplier's per-item charge plus fulfillment. SG&A is the overhead of running the store around those sales. Mixing them together makes your gross margin and your SG&A ratio both wrong.
Is marketing or ad spend part of SG&A or COGS?
Ad spend is part of SG&A — specifically the "selling" portion. It's a cost of acquiring customers, not a cost of producing the product, so it sits below gross profit as an operating expense. For many POD stores, ad spend is the single biggest SG&A line, which is why your SG&A ratio can look alarming even when the product itself is profitable.
When would SG&A and operating expenses be different numbers?
Whenever you have a non-SG&A operating cost. The common ones are research and development (which U.S. standards often break out separately) and standalone depreciation or amortization. Ramp notes that R&D may be classified separately, inside SG&A, or capitalized depending on your accounting policy. A one-person POD store with none of these will usually see SG&A equal total operating expenses — but that's a coincidence of your cost structure, not a rule.
What's a healthy SG&A percentage for a POD store?
It depends on your stage and how hard you're spending on ads, so treat benchmarks as a sanity check, not a target. Ramp reports a 20–30% of revenue range for retail SG&A and a 14.3% U.S. cross-industry average in 2025. If your SG&A ratio runs well above the retail range, it's almost always ad spend — so the fix is ad efficiency and retention, not cutting your Shopify plan.