Operating Expenditure (OpEx)
Day-to-day expenses required to run the business — salaries, rent, utilities, marketing.
Operating expenditure (OpEx) covers the ongoing costs of running a business that are fully expensed in the period they occur. This includes salaries, rent, utilities, marketing, insurance, office supplies, professional fees, and software subscriptions.
The CapEx vs OpEx distinction matters for several reasons. OpEx reduces taxable income immediately; CapEx is deducted gradually through depreciation. OpEx provides full P&L impact in the current period; CapEx spreads it over years.
Cloud computing has shifted much of traditional IT CapEx (buying servers, hardware) to OpEx (paying monthly for AWS, Azure, SaaS subscriptions). This "OpEx model" is generally preferred by finance teams because it provides flexibility, avoids large upfront commitments, and is easier to scale up or down.
For financial analysis, operating expenses are broken into fixed costs (rent, base salaries — don't change with revenue) and variable costs (commissions, hosting, shipping — scale with activity). This breakdown is essential for break-even analysis, margin forecasting, and understanding operating leverage.
Related Terms
Spending on long-term assets like equipment, property, or technology that benefits the business over multiple years.
A financial report summarising revenue, costs, and profit over a specific period.
The percentage of revenue remaining after subtracting cost of goods sold — a measure of pricing power.
Calculating the point at which total revenue equals total costs — no profit, no loss.
Further Reading
Feeling overwhelmed by business finances? This practical guide helps business owners build genuine financial control — without becoming a finance expert.
Still running on spreadsheets? Here are five clear warning signs your finance operations need a serious upgrade — and exactly what to do about each one.