---
title: "What Is Opex?"
term: "Opex"
description: "Opex (operating expenses) is the ongoing cost of running a business—payroll, rent, software, marketing, and admin—excluding large one-time capital purchases. It shows up on the income statement and directly affects burn rate and runway."
date: 2026-07-25T00:00:00.000Z
updated: 2026-07-25T00:00:00.000Z
topics: ["venture-capital"]
source: https://venturecapitaltracker.com/glossary/opex
---

# What Is Opex?

> Opex (operating expenses) is the ongoing cost of running a business—payroll, rent, software, marketing, and admin—excluding large one-time capital purchases. It shows up on the income statement and directly affects burn rate and runway.

**Opex**—short for operating expenses—is the recurring cost of running the company day to day, before you get to one-off capital investments or financing items.

### How it works

Typical opex lines include compensation, benefits, cloud and software subscriptions, sales and marketing spend, professional services, and general administrative costs. On a startup P&L, opex usually sits above operating income. Add revenue minus cost of goods sold (COGS), subtract opex, and you see whether core operations are profitable or still investing for growth.

Investors often split opex into buckets—R&D, sales and marketing, G&A—to compare companies at the same stage. A seed company might run heavy product and G&A opex with little revenue; a growth company might shift spend toward sales and marketing as it scales. Monthly burn is essentially opex (plus sometimes capex and financing cash flows) minus cash collected.

### Why it matters

- **Founders:** Opex is the budget you control between rounds. Hiring plans, vendor choices, and marketing tests all flow through it. Runway equals cash divided by net burn, and burn is largely opex-driven.
- **Investors:** Opex trends signal discipline and scalability. Rising revenue with opex growing slower than sales suggests operating leverage; flat revenue with rising opex is a warning sign in diligence.

### Common mistake

Confusing opex with capex or treating all spending as interchangeable. Capitalizing software development or buying hardware affects cash and balance sheet differently than paying salaries. Misclassification can hide true burn.

### Related ideas

Compare [capex](/glossary/capex), burn rate, runway, COGS, and operating leverage when modeling how a company scales.

## FAQ

### What is opex in simple terms?

Opex is what you spend to keep the lights on each month or quarter: salaries, tools, office, ads, and similar recurring costs. It is separate from capex, which is spending on long-lived assets like equipment or infrastructure buildouts.

### Why does opex matter?

Investors use opex to judge how much runway you have and whether growth is efficient. Founders who understand opex can decide when to hire, when to cut, and how much margin the business can eventually support.


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Source: https://venturecapitaltracker.com/glossary/opex