Overhead Costs

Overhead costs are the ongoing expenses a business incurs to operate, separate from the direct costs of creating a product or service. Think of them as the business’s “fixed expenses” that keep the lights on. These can include rent, utilities, salaries for administrative staff, office supplies, and insurance. Unlike direct costs (materials, labor for production), overhead costs don’t directly vary with the amount of products made or services sold. They’re crucial when setting prices and ensuring the business remains profitable.