Examples from actual companies
For Netflix, cost of revenue is mostly comprised of amortization. Netflix amortizes the cost of producing streaming content (Orange is the New Black) and the cost of licensing streaming content (an Avengers movie on Netflix). Rather than report these costs as amortization expense, Netflix includes them in the cost of revenue.
Twitter also includes some amortization costs in its cost of revenue, specifically those related to internally developed software. But Twitter’s cost of revenue also includes:
- data center costs
- hosting costs
- tech support costs
- energy costs
- traffic acquisition costs
- depreciation for its servers
- compensation for its operations staff
Facebook includes many of these same costs in its cost of revenue, but also includes credit card and payment transaction fees. Thus, if you purchase something using PayPal on Facebook, Facebook would include the fee charged by PayPal in cost of revenue.
Snapchat also includes cost of revenue in its Income Statement.