What is Operating Expense (OpEx)?
Nexa Consultancy | Startup & Finance Glossary
An Operating Expense (OpEx) is an expense a business incurs through its normal day-to-day operations. OpEx includes costs that are not directly tied to the production of a product or service (which are covered under COGS). Major categories of OpEx include Sales & Marketing, Research & Development (R&D), and General & Administrative (G&A) expenses.
For Startups: Managing OpEx is crucial for controlling the burn rate. For a tech startup, the largest operating expense is almost always payroll. Other examples include rent, marketing spend, and software subscriptions. Investors closely monitor OpEx to ensure the company is investing efficiently in growth.
Example: A startup's monthly OpEx might consist of ₹10 Lakhs in salaries, ₹2 Lakhs in office rent, and ₹3 Lakhs in marketing costs.