Operating expense (opex)

What is operating expense (opex)?

Operating expense is day-to-day spending to run the business, such as salaries, rent, travel and software, expensed in the period it occurs. Sales salaries, commissions, marketing and administrative staff are typical examples. Some companies report opex separately from cost of services, so check where field supervision and dispatch sit before comparing numbers.

Why it matters to a revenue leader

The sales team is an operating expense. Every new seller, manager and tool adds opex before it adds gross profit, which is why finance asks for a payback on headcount. On the customer side, routine maintenance and inspection agreements are usually paid from the buyer's operating budget, which can be easier to approve than a capital request. A revenue leader who knows both sides can plan hiring and shape offers with fewer surprises.

A facility services company's sales opex is $3 million a year: $2.2 million of seller and manager pay, $500,000 of travel and marketing and $300,000 of software. Revenue is $45 million, so sales opex is about 6.7 percent of revenue. Adding two sellers at $140,000 each lifts it to about 7.3 percent until their sales arrive.