All terms

Overhead Costs

Indirect costs required to support business operations.

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Overhead Costs are ongoing business expenses that are not directly tied to producing a product or service, such as rent, utilities, and administrative salaries.

In depth

Overhead Costs include indirect expenses that support the overall functioning of a business but are not directly linked to revenue generation. These typically include office rent, administrative staff salaries, utilities, legal fees, and insurance. Unlike variable costs, overhead costs tend to remain relatively fixed regardless of sales volume. For startups, high overhead can reduce flexibility and increase burn rate. Managing overhead efficiently is important for maintaining lean operations, especially in early stages where revenue may be limited.