Operating Expense

Operating expense means the regular costs a company pays to run its business. In simple terms, operating expenses are the day-to-day business costs beyond the direct cost of goods or services. Operating expenses are important because they affect operating income and profitability. Investors watch whether a company can control these costs while growing revenue. For example, salaries, rent, marketing, research, software, and administrative costs can be operating expenses. Operating expense is not the same as cost of goods sold. Cost of goods sold is directly tied to products sold, while operating expenses support the broader business.