Operating expenses

An operating expense (operating expenditure, operational expense, operational expenditure, OPEX) is an ongoing cost for running a product, business, or system.

Its counterpart, a capital expenditure (CAPEX), is the cost of developing or providing non-consumable parts for the product or system.

In business, an operating expense is a day-to-day expense such as sales and administration, or research & development. It is the money the business spends in order to turn inventory into throughput.

On an income statement, “operating expenses” is the sum of a business's operating expenses for a period of time, such as a month or year.

In throughput accounting, the cost accounting aspect of the theory of constraints (TOC), operating expense is the money spent turning inventory into throughput. In TOC, operating expense is limited to costs that vary strictly with the quantity produced, like raw materials and purchased components. Everything else is a fixed cost, including labour (unless there is a regular and significant chance that workers will not work a full-time week when they report on its first day).

In a real estate context, operating expenses include costs associated with the operation and maintenance of an income-producing property.

Operating expenses include:

§ accounting expenses

§ license fees

§ maintenance and repairs, such as snow removal, trash removal, janitorial service, pest control, and lawn care

§ advertising

§ office expenses

§ supplies

§ attorney fees and legal fees

§ utilities, such as telephone

§ insurance

§ property management, including a resident manager

§ property taxes

§ travel and vehicle expenses