Empire AI Finance
Operating Expenses (OPEX)
The indirect costs of keeping the lights on. Understand what counts as OPEX, how to total it, and why it sits between gross profit and operating profit.
OPEX Calculator
Your Indirect Costs
Total Operating Expenses
£0.00
Sum of rent, admin salaries, marketing, software, utilities, professional fees and other admin costs.
What Operating Expenses Mean
Operating expenses, often called OPEX, are the indirect costs of running a business. They are not tied directly to producing goods or delivering services, but they are necessary to keep the business operating day to day.
Common operating expenses include rent, salaries for admin and support staff, marketing, software subscriptions, utilities, insurance and professional fees. These costs appear below gross profit on the profit and loss statement.
Operating Expenses Formula
Total OPEX
OPEX = Sum of all indirect operating costs
Add every indirect cost incurred during the period: rent, admin salaries, marketing, software, utilities, insurance, professional fees and other overheads.
Operating Profit
Operating Profit = Gross Profit − OPEX
Once you know OPEX, subtract it from gross profit to see how much the business earns from its core operations before interest and tax.
Worked Example
A small business has the following monthly indirect costs.
OPEX = £2,400 + £8,500 + £1,200 + £450 + £350 + £600 + £500
OPEX = £14,000
OPEX vs CAPEX
| Aspect | OPEX | CAPEX |
|---|---|---|
| Definition | Day-to-day running costs | Spending on long-term assets |
| Examples | Rent, salaries, marketing, software subscriptions, utilities | Equipment, vehicles, property, major software builds |
| Accounting treatment | Expensed in the current period | Capitalised and depreciated over useful life |
| Impact on P&L | Reduces operating profit immediately | Reduces profit gradually through depreciation |
| Tax treatment | Usually deductible in the same year | Claimed over multiple years via capital allowances |
Use Cases
Profitability Analysis
Subtract OPEX from gross profit to calculate operating profit and see how efficiently the business is run.
Budgeting & Forecasting
Build monthly or annual OPEX budgets and compare actual spend to spot overruns early.
Cost Control
Identify recurring subscriptions, duplicate tools and discretionary spend that can be reduced without harming growth.
Investor Reporting
Show investors a clear split between direct costs (COGS), operating costs (OPEX) and capital investment (CAPEX).
Mini-FAQ
What counts as an operating expense?
Operating expenses include indirect, ongoing costs such as rent, admin salaries, marketing, software subscriptions, utilities, insurance and professional fees.
Is OPEX the same as COGS?
No. COGS is the direct cost of producing or buying the goods sold. OPEX is the indirect cost of running the business.
What is the difference between OPEX and CAPEX?
OPEX covers day-to-day running costs expensed in the current period. CAPEX is spending on long-term assets that are capitalised and depreciated.
How do you reduce operating expenses?
Review recurring subscriptions, renegotiate supplier contracts, automate manual processes and benchmark each category against revenue. Avoid cuts that harm growth or compliance.
Why are operating expenses important?
OPEX is subtracted from gross profit to calculate operating profit. Managing OPEX well is one of the fastest ways to improve overall profitability.
Founder Vision
Empire AI Finance exists to give founders a clear view of where money is going. OPEX is often the area where small decisions compound into big differences in profitability.
Our tools help you separate direct costs from indirect costs, compare OPEX to revenue, and build forecasts that keep the business lean without starving growth.
Trust & Safety
Empire AI Finance is a software and analysis platform. We do not provide financial advice, manage money, execute trades, hold deposits or promise investment returns. The information on this page is for educational and informational purposes only.
For decisions affecting your business, tax position or legal obligations, consult a qualified accountant or legal professional familiar with your jurisdiction.
What Empire AI Finance Does Not Provide
Financial Advice
We do not give personalised financial, investment, tax or legal advice. Our outputs are generated by software for informational purposes.
Trading or Brokerage
We do not execute trades, hold securities, or operate an investment platform. Empire AI Finance is a software toolset, not a broker-dealer.
Deposit-Taking or Custody
We never request, receive or hold client funds, cryptocurrencies or assets. All payments go through secure third-party checkout providers.
Promises of Returns
We do not guarantee profits, savings, valuations or business outcomes. Any examples shown are illustrative, not typical or guaranteed.
Explore the full toolkit
From OPEX and COGS to gross profit and net margin, Empire AI Finance gives you the calculators and explainers to understand your numbers with clarity.
Last updated: 23 October 2026