Operating costs are the day-to-day costs that are required to keep a business running. Some of these costs are unavoidable (fixed costs), others change with an increase or decrease in production (variable costs), and the third type has a base cost but increases with higher production (semi-variable costs).
Fixed costs like rent and electricity are considered overhead costs because they can’t be avoided. Variable costs and semi-variable costs, on the other hand, can be monitored and managed to reduce spending.
In this article, we’re going to discuss the three different types of operating costs, show examples of each type, and learn how to manage them.