operating costs
/ˈɒpəreɪtɪŋ kɒsts/
Meaning
Operating costs are the ongoing expenses required to run a business on a day-to-day basis. This includes things like rent, utilities, payroll, marketing, and insurance, but excludes the cost of producing goods or paying taxes. Managing these costs is essential for maintaining a healthy profit.
Examples
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Switching to energy-efficient lighting helped us lower our monthly operating costs.
Switching to energy-efficient lighting helped us lower our monthly operating costs.
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Our operating costs have risen significantly due to the new marketing campaign.
Our operating costs have risen significantly due to the new marketing campaign.
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Startups often struggle to cover their operating costs during their first year.
Startups often struggle to cover their operating costs during their first year.
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We need to review our operating costs to find areas where we can save money.
We need to review our operating costs to find areas where we can save money.
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The company decided to close three offices to reduce its global operating costs.
The company decided to close three offices to reduce its global operating costs.
Common Mistakes
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✗ We spent $10,000 on operating costs to manufacture 1,000 t-shirts.
✓ We spent $10,000 on production costs to manufacture 1,000 t-shirts.
Operating costs refer to day-to-day business administration (like rent and admin salaries), not the direct costs of manufacturing goods (which are production costs).
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✗ The operating cost of our office is very high.
✓ The operating costs of our office are very high.
This term is almost always used in the plural form ('costs') when referring to the general category of business expenses.
Related Expressions
Practice
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By allowing employees to work from home, the company saved a lot on ___.
💡 Daily expenses like office rent, electricity, and internet.
Show answer
operating costs
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If our ___ exceed our revenue, we will start losing money.
💡 The money needed to keep the business running every day.
Show answer
operating costs