Selling Expense

Beginner

A selling expense is a cost incurred to market and sell a business's products or services, such as advertising, sales staff pay, commissions and delivery to customers.

Selling expenses are one group of operating expenses. They cover everything involved in finding customers, persuading them to buy and getting products to them.

Common selling expenses include advertising and promotions, salaries and commissions of sales staff, sales travel, the cost of showrooms or retail stores used for selling, packaging for shipment and delivery costs to customers.

On the income statement, selling expenses are often combined with general and administrative expenses into a single line called selling, general and administrative expenses, or SG&A.

For example, a company might spend 90,000 on advertising, 150,000 on sales staff salaries and commissions and 30,000 on deliveries in a year, giving selling expenses of 270,000.

Businesses watch selling expenses relative to revenue. If sales rise faster than selling expenses, marketing is becoming more efficient. If selling expenses rise without a matching increase in sales, the business may be spending too much to win customers.

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