Operating Costs are the expenses which are related to operating your business. They are fixed costs required to run your business, like salaries, rent, and software subscriptions that you need to generate revenue.
Think of operating costs as calories in your business. Good calories make you healthy, while too many calories can make you unhealthy. Monitoring your operating costs and net profit margin on a regular basis is important to make sure your business is healthy and turning a profit. We recommend reviewing and updating your operating costs every month.
How do Operating Costs work in OrderMetrics?
We sync your operating costs daily at midnight in local time to calculate all of your metrics at once. We smooth your operating expenses in the month they occur. For example, if you spent $10,000 on Jan 15, we will take that $10,000 and divide it by the number of days in January- $322/day.
Why does this help you?
Smoothing expenses over the month helps determine the sales to breakeven on a daily basis and helps create a way for merchants to budget for future monthly expenses. This helps merchants estimate and plan future expenses.
How to add an Operating Cost
Click ‘Add Cost’ in the top right hand corner. Enter Payee, Category, select whether you’d like the expense to repeat automatically, enter a Date, and the Expense Amount. Hit save.
Categories for Operating Costs include the following
Advertising & Marketing
Consulting & Contractors
Meals & Entertainment
Office & General Expenses
Professional Services Fees
Salaries & Wages
Software & Subscriptions