{"id":34906,"date":"2024-07-15T00:00:00","date_gmt":"2024-07-15T07:00:00","guid":{"rendered":"https:\/\/newrcblog.wpengine.com\/its-2009-why-do-you-still-use-a-paper-fax\/"},"modified":"2025-03-13T06:18:22","modified_gmt":"2025-03-13T13:18:22","slug":"operating-expenses","status":"publish","type":"post","link":"\/us\/en\/blog\/operating-expenses\/","title":{"rendered":"Operating expenses formula: How to calculate and reduce OpEX"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">As the saying goes \u201cYou\u2019ve got to spend money to make money.\u201d and, of course, it\u2019s true. When you take into account the costs associated with an office or shop location, insurance fees, payroll, and even office supplies, the costs soon mount up.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">But to really understand your bottom line, you have to organize and understand your operating expenses. So, we\u2019re going to clear up exactly what an operating expense is, as well as what it isn\u2019t, and tell you how you can calculate yours using a simple operating expense formula.<\/span><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">If you\u2019re just here because you\u2019re wondering, \u201c<\/span><span style=\"font-weight: 400;\">What is the formula for operating expenses?\u201d<\/span><span style=\"font-weight: 400;\">, then \u201c<\/span><span style=\"font-weight: 400;\">How do you calculate operating expenses?\u201d section is the one for you.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">But if you also want to try to reduce your operating expenses, we\u2019ve got five tips that you can use to\u00a0 do exactly that.<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><a href=\"#what\"><span style=\"font-weight: 400;\">What exactly are operating expenses?\u00a0<\/span><\/a><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><a href=\"#not-included\"><span style=\"font-weight: 400;\">What is not included in operating expenses?<\/span><\/a><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><a href=\"#how\"><span style=\"font-weight: 400;\">How do you calculate operating expenses?<\/span><\/a><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><a href=\"#5-tips\"><span style=\"font-weight: 400;\">5 tips to reduce your small business operating expenses<\/span><\/a><\/li>\n<\/ul>\n<hr \/>\n<p>\ud83d\udcb8 <span style=\"font-weight: 400;\">Discover how connected communications can transform your business operations and significantly boost your revenue with our latest eBook. Dive into practical strategies and expert insights that will enhance your communication systems and drive your business success\u2014download today!<\/span><\/p>\n<div class=\"download-form-widget standart-download-form\" data-url=\"https:\/\/assets.ringcentral.com\/us\/ebook\/unlock-revenue-connected-communications.pdf\" data-id=\"69e387b942722\" id=\"69e387b942722\">\n\t\t<button tabindex=\"on\"  on=\"tap:69e387b942722.toggleClass(class='open')\" class=\"open-modal-download-action download-form-button\" type=\"submit\">Download it now<\/button><\/p>\n<div class=\"download-form-modal\">\n<div class=\"download-form-modal-body\">\n<div class=\"download-form-modal-content\">\n<div class=\"download-form-modal-title\">Explore revenue-boosting strategies through connected communications. Download the free guide to learn how <\/div>\n<form class=\"download-form SMB\" method=\"post\">\n<div class=\"download-form-part\">\n\t\t\t\t\t\t\t<input class=\"download-form-input\" aria-label=\"Full Name\" aria-required=\"true\" aria-invalid=\"false\" type=\"text\" name=\"fullname\" placeholder=\"Full Name\" data-dl-events-hover=\"true\" data-dl-element=\"text\" data-dl-additional-info=\"download form\">\n\t\t\t\t\t\t<\/div>\n<div class=\"download-form-part\">\n\t\t\t\t\t\t\t<input class=\"download-form-input\" aria-label=\"Email (please enter a work email address)\" aria-required=\"true\" aria-invalid=\"false\" type=\"email\" autocomplete=\"on\" name=\"email\" placeholder=\"Email (please enter a work email address)\" data-dl-events-hover=\"true\" data-dl-element=\"email\" data-dl-additional-info=\"download form\">\n\t\t\t\t\t\t<\/div>\n<div>\n\t\t\t\t\t\t\t<input type=\"hidden\" name=\"popup_form\" value=\"1\">\n\t\t\t\t\t\t<\/div>\n<div>\n\t\t\t\t\t\t\t<input type=\"hidden\" name=\"Lead_Entry_Source__c\" value=\"RC Blog\" class=\"download-form-input\"\/>\n\t\t\t\t\t\t<\/div>\n<div class=\"download-form-part\">\n\t\t\t\t\t\t\t<button class=\"download-form-submit\" type=\"submit\" data-dl-element=\"button\" data-no-auto-dl=\"true\" data-dl-additional-info=\"download form\" data-dl-name=\"Get it now\">Get it now<\/button>\n\t\t\t\t\t\t<\/div>\n<\/p><\/form>\n<p> \t\t\t\t\t<button on=\"tap:69e387b942722.toggleClass(class='open')\" role=\"button\" tabindex=\"0\"  class=\"download-form-modal-close\"><\/button>\n\t\t\t\t<\/div>\n<div class=\"download-form-modal-thank\">Enjoy!<\/div>\n<\/p><\/div>\n<\/p><\/div>\n<\/p><\/div>\n<hr \/>\n<h2 id=\"what\"><span style=\"font-weight: 400;\">What exactly are operating expenses?<br \/>\n<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Operating expenses, sometimes abbreviated to \u201cOpEx,\u201d are the necessary costs that your business incurs to keep it running, but they\u00a0 aren\u2019t related to the production of a product.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">According to the IRS, these operating costs must be ordinary (common and accepted in the trade) and necessary (appropriate to the business) in order to qualify as operating expenses.<\/span><\/p>\n<div class=\"tip\">\n<div class=\"tip-heading\"><b><span style=\"font-weight: 400;\">\ud83d\udca1 Pro-tip:<\/span><\/b><\/div>\n<p><span style=\"font-weight: 400;\">If your business files taxes in the United States, you\u2019ll want to track and document your OpEx because they\u2019re tax deductible!<\/span><\/p>\n<\/div>\n<h3 class=\"heading h3\"><span style=\"font-weight: 400;\">Types of operating expenses<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Expenses that your company incurs that aren\u2019t directly related to goods and services can be classified as operating expenses. These can be divided into various types:<\/span><\/p>\n<h3 class=\"heading h3\"><span style=\"font-weight: 400;\">1. Sales and marketing expenses<\/span><\/h3>\n<h3 class=\"heading h3\" style=\"text-align: left;\"><span style=\"font-weight: 400;\">2. The costs of marketing your products and services are classed as\u00a0 operating expenses. This includes the cost of things such as:<\/span><\/h3>\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li style=\"list-style-type: none;\">\n<ul style=\"list-style-type: disc;\">\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Advertising and marketing\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Events<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Travel for sales-related purposes<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Product sampling<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Promotional materials, such as signage in shops<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h3 class=\"heading h3\"><span style=\"font-weight: 400;\">3. Compensation for staff<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Of course, you need to factor in the cost of paying the people who keep your business running. This includes the amount you spend on:<\/span><\/p>\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li style=\"list-style-type: none;\">\n<ul style=\"list-style-type: disc;\">\n<li><span style=\"font-weight: 400;\">Salaries<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Paying freelancers\u2019 invoices<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Pensions<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Employee benefits<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h3 class=\"heading h3\"><span style=\"font-weight: 400;\">4. Office expenses<\/span><\/h3>\n<p style=\"text-align: left;\"><span style=\"font-weight: 400;\">The costs of anything that\u2019s required to keep your office operating are also operating expenses. This includes things such as:<\/span><\/p>\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li style=\"list-style-type: none;\">\n<ul style=\"list-style-type: disc;\">\n<li><span style=\"font-weight: 400;\">Office supplies like pens, files, and paper for printers<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Furniture for your office<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Property taxes<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Rent and utilities<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2 id=\"not-included\"><span style=\"font-weight: 400;\">What is <\/span><i><span style=\"font-weight: 400;\">not<\/span><\/i><span style=\"font-weight: 400;\"> included in operating expenses?<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Most of what automatically comes to mind as you think about the costs of running a business qualify as operating expenses. But there are some technicalities to be aware of, and a few expenses don\u2019t fall under this umbrella.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">First of all, the cost of goods sold (including materials and manufacturing) doesn\u2019t qualify as an OpEx, so remember to exclude those when using the operating expenses calculation formula we\u2019re going to introduce you to shortly.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Capital expenditures like buildings or machinery also don\u2019t come under an OpEx. Other non-operating expenses include:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Depreciation<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Amortization<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Bank fees and interest charges<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Lawsuit settlements<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Currency exchange fees<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Restructuring costs<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Obsolete inventory<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">That doesn\u2019t mean that these aren\u2019t costs your business has to deal with\u2014they absolutely are. But there\u2019s a distinction in the way these costs are handled when you file your taxes, so it\u2019s important to keep track of operating expenses separately.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Plus, as we\u2019ll discuss later, when you\u2019re looking to save money in business, the best way to do so is to actually look at your operating expenses separately from other expenses. These are usually the easiest to reduce to make a real impact on your bottom line.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">But we\u2019re getting ahead of ourselves. Now that we know what is and isn\u2019t an operating expense, you\u2019re ready to calculate your OpEx with a business operating expenses formula.<\/span><\/p>\n<h2 id=\"how\"><span style=\"font-weight: 400;\">How do you calculate operating expenses?<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Like all numbers in business, your operating expense total only makes sense within a larger context. Once you know your operating expenses, examine them within the context of your revenues.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">To calculate operating expenses and find your operating expense ratio (OER), add your cost of goods sold (COGS) to your operating expenses. Then divide by your revenue to get a percentage of revenue that you\u2019re spending on these expenses\u2014an operating expense ratio.<\/span><\/p>\n<h3 class=\"heading h3\"><span style=\"font-weight: 400;\">Operating expense formula<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">To put it more simply, the <\/span><span style=\"font-weight: 400;\">total operating expense formula<\/span><span style=\"font-weight: 400;\"> is:<\/span><\/p>\n<p><b>COGS + OpEx\/Revenue = OER<\/b><\/p>\n<p><span style=\"font-weight: 400;\">After using the operating expenses formula to calculate your OER, you can look up average operating expense ratios for your industry to see how your business is doing in comparison.\u00a0<\/span><\/p>\n<h2 class=\"heading h2\"><span style=\"font-weight: 400;\">Does an increase in operating expenses signal trouble?<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Yes and no. It depends on the context surrounding this increase. If your revenue is staying still or not increasing and your operating expenses are growing, that\u2019s a sign of trouble because it signifies that your business might be making less profit.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">On the other hand, an increase in your operating expenses can also be a sign that your company is growing. Your operating expenses may be increasing because you\u2019re paying for more staff to deal with your business\u2019 extra demand, for example.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">What\u2019s important to note is that looking at your operating expenses alone won\u2019t show you a true picture of how your business is performing. Your OER is more useful when it comes to assessing your company\u2019s performance.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">A high OER is a sign that your business is performing well, whereas a low OER indicates that you need to make adjustments to improve business performance.<\/span><\/p>\n<h2 id=\"5-tips\"><span style=\"font-weight: 400;\">5 tips to reduce your business&#8217; operating expenses\u00a0<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Expenses are an unavoidable part of doing business\u2014you need to keep the lights on, after all. So why focus on reducing operating expenses?<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Well, an increase in operating expenses cuts into your profits while reducing operating expenses allows your business to make more money.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">As a business (and especially if you\u2019re a small business), when you\u2019re looking to improve the bottom line, operating expenses are the first place to turn. That\u2019s because they frequently are less fixed than, say, production costs.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Plus, while a reduction in production costs might also be able to help your bottom line, it could be at the expense of quality. And while you may be able to increase your prices to make more money, you may also jeopardize sales at a higher price point.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Therefore, operating expenses are generally where you\u2019ll look when it\u2019s time to save some money in your small business. Luckily, since operating expenses cover so many business areas, there are a lot of ways to experiment and try to reduce them.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">We\u2019ve assembled some of our favorites below:<\/span><\/p>\n<h3><span style=\"font-weight: 400;\">1. Consider remote work options<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">One major operating cost for small businesses is the cost of a workspace\u2014rent, utilities, and\u00a0 maintenance are a major line item for businesses that choose to operate out of a physical location.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For some companies, like clinics and shops, it may not be possible to work remotely, but if you\u2019re paying for an office space, you may consider remote work to save on your bottom line.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u00a0And, with <\/span><a href=\"https:\/\/www.ringcentral.com\/us\/en\/blog\/remote-working-tools\/\"><span style=\"font-weight: 400;\">remote work tools<\/span><\/a><span style=\"font-weight: 400;\"> like <\/span><a href=\"https:\/\/www.ringcentral.com\/us\/en\/blog\/instant-messaging-programs\/\"><span style=\"font-weight: 400;\">team messaging<\/span><\/a><span style=\"font-weight: 400;\"> and <a href=\"https:\/\/www.ringcentral.com\/video-call.html\">video call<\/a>, there\u2019s no reason why your business can\u2019t stay just as connected as it would be in an office.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For example, <\/span><a href=\"https:\/\/www.ringcentral.com\/download.html\"><span style=\"font-weight: 400;\">RingCentral\u2019s desktop and mobile app<\/span><\/a><span style=\"font-weight: 400;\"> gives you messaging, video <a href=\"https:\/\/www.ringcentral.com\/free-conference-call.html\">conference call services<\/a>, and a phone system\u2014all in one app:<\/span><\/p>\n<div class=\"rc_custom_video\"><a class=\"rc_custom_video__link\" href=\"https:\/\/www.youtu.be\/fhUY2AGF7xQ\">\n\t\t            <picture><source srcset=\"https:\/\/i.ytimg.com\/vi_webp\/fhUY2AGF7xQ\/maxresdefault.webp\" type=\"image\/webp\"><img decoding=\"async\" class=\"rc_custom_video__media\" src=\"https:\/\/i.ytimg.com\/vi\/fhUY2AGF7xQ\/maxresdefault.jpg\" alt=\"\">\n\t\t            <\/picture>\n\t\t        <\/a><br \/>\n\t\t        <button class=\"rc_custom_video__button\" aria-label=\"Play video\"><svg width=\"68\" height=\"48\" viewBox=\"0 0 68 48\"><path class=\"rc_custom_video__button-shape\" d=\"M66.52,7.74c-0.78-2.93-2.49-5.41-5.42-6.19C55.79,.13,34,0,34,0S12.21,.13,6.9,1.55 C3.97,2.33,2.27,4.81,1.48,7.74C0.06,13.05,0,24,0,24s0.06,10.95,1.48,16.26c0.78,2.93,2.49,5.41,5.42,6.19 C12.21,47.87,34,48,34,48s21.79-0.13,27.1-1.55c2.93-0.78,4.64-3.26,5.42-6.19C67.94,34.95,68,24,68,24S67.94,13.05,66.52,7.74z\"><\/path><path class=\"rc_custom_video__button-icon\" d=\"M 45,24 27,14 27,34\"><\/path><\/svg><br \/>\n\t\t        <\/button>\n\t\t    <\/div>\n<p><span style=\"font-weight: 400;\">Just be sure to work intentionally to support a <\/span><a href=\"https:\/\/www.ringcentral.com\/us\/en\/blog\/collaborative-culture\/\"><span style=\"font-weight: 400;\">company culture of collaboration<\/span><\/a><span style=\"font-weight: 400;\"> and communication, even when your team isn\u2019t in the same physical space<\/span><\/p>\n<h3><span style=\"font-weight: 400;\">2. Reduce travel costs<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">There are some jobs that absolutely need to be done on location, and then there are meetings that don\u2019t necessarily need to happen in person. Examine your company\u2019s travel expenses and consider whether you can cut back on in-person meetings and sales calls to reduce travel costs.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Whether or not your team works remotely, <\/span><span style=\"font-weight: 400;\">video calling<\/span><span style=\"font-weight: 400;\"> is still a great option for connecting with leads, holding important meetings, and, yes, even closing deals.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">If you haven\u2019t tried video-conferencing software for business lately, you might be surprised by the quality. With HD video calling, great quality audio, and <\/span><a href=\"https:\/\/www.ringcentral.com\/us\/en\/blog\/screen-sharing-software\/\"><span style=\"font-weight: 400;\">screen sharing<\/span><\/a><span style=\"font-weight: 400;\"> with annotation features, a good platform can help your business project a professional image while hosting meetings virtually.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Again, RingCentral\u2019s app gives you the ability to do all that in your<\/span> <a href=\"https:\/\/www.ringcentral.com\/us\/en\/blog\/new-video-conferencing-features-that-improve-how-you-work-together\/\"><span style=\"font-weight: 400;\">video-conferencing<\/span><\/a><span style=\"font-weight: 400;\"> calls:<\/span><\/p>\n<p><img decoding=\"async\" class=\"aligncenter size-full wp-image-56868\" src=\"\/us\/en\/blog\/wp-content\/uploads\/2020\/11\/Turn-on-mini-map-Bring-everyone-to-me.gif\" alt=\"The RingCentral app provides useful features such as screen sharing and annotation.\" width=\"1920\" height=\"1080\" \/><\/p>\n<p>&nbsp;<\/p>\n<h3><span style=\"font-weight: 400;\">3. Add up your subscription costs<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Recurring costs are one of the easiest ways that money slips away from many businesses without anyone noticing.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Examine your bills and look at all of those subscriptions that automatically charge you every month or every year. Then start examining your team\u2019s usage of each of your subscriptions. You might be surprised by how little you\u2019re actually using some of the subscriptions you\u2019re paying for.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">One good rule of thumb, especially as a growing business, is to choose software solutions that do more than one thing well. Like having an<a href=\"https:\/\/www.ringcentral.com\/us\/en\/blog\/what-is-an-omnichannel-cloud-contact-center\/\"> omnichannel contact center<\/a> that handles customer interactions across multiple platforms such as social media, live chat, phone calls.\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Or as opposed to having one tool for <a href=\"https:\/\/www.ringcentral.com\/how-does-a-virtual-phone-call-work.html\">virtual calls<\/a>, another for file sharing, and another for calling, find one platform that can do them all.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Tools like the <\/span><a href=\"https:\/\/www.ringcentral.com\/ringex.html\"><span style=\"font-weight: 400;\">RingCentral RingEX<\/span><\/a><span style=\"font-weight: 400;\"> can handle all of that (and more), plus it even comes with features like the ability to switch from a phone call to a video call with just the tap of a button:<\/span><\/p>\n<p><img decoding=\"async\" class=\"aligncenter size-full wp-image-56869\" src=\"\/us\/en\/blog\/wp-content\/uploads\/2020\/11\/Meeting-SwitchUI-.png\" alt=\"\" width=\"1900\" height=\"1080\" \/><\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">Plus, when you have too many software options for your team to work with, it\u2019s unlikely that they\u2019ll actually all get used to the fullest extent.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">How much time do you need to spend on training team members on different apps? How much time and mental effort is your team wasting when they have to switch between different platforms and windows all day long?\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Choose versatile software so you can waste less time training your team, avoid subscription creep, and spend less on <\/span><a href=\"https:\/\/www.ringcentral.com\/us\/en\/blog\/saas-tools-for-startups\/\"><span style=\"font-weight: 400;\">SaaS products<\/span><\/a><span style=\"font-weight: 400;\"> .<\/span><\/p>\n<hr \/>\n<p class=\"p1\"><span class=\"s1\">\ud83d\udd79\ufe0f<\/span> <span style=\"font-weight: 400;\">Get a hands-on look at how RingCentral can streamline the number of tools you\u2019re paying for by booking a product tour:<\/span><\/p>\n<p class=\"p1\"><button data-href=\"#leadform-popup\" class=\"js-open-popup-activator btn primary\" >Choose a time<\/button><\/p>\n<hr \/>\n<h3><span style=\"font-weight: 400;\">4. Shop around and pay on time<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Examine your operating expenses and ask yourself\u2014do you think you\u2019re getting a good deal?\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">By shopping around for things like technology, insurance costs, and even building maintenance, you can end up saving a lot. Don\u2019t be afraid to get quotes from competitors of the vendors you\u2019re using now, just to be sure you\u2019re paying a fair price.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">You might also ask vendors you work with often if they can offer a discount for invoices paid early or upfront in full.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Keep an eye out for special promotions that will price match for your company\u2014it never hurts to ask!<\/span><\/p>\n<h3><span style=\"font-weight: 400;\">5. Outsource<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">As a small business, hiring any employee represents a significant operating expense. If the cost of payroll is a major percentage of your operating expenses and you\u2019re trying to avoid costly new hires, consider outsourcing or hiring freelancers.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">By working on a per-project basis with an expert in the field, you can get the high-quality work you expect for a rate that\u2019s much more budget-friendly than an annual salary.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Plus, you\u2019ll have the opportunity to work with someone who\u2019s specialized in exactly what you need them to do\u2014whether it\u2019s marketing or accounting\u2014rather than hiring a generalist to work full time.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Of course, once you start to have freelancers working nearly full time for you or have to hire multiple freelancers to do the same thing, it may be time to consider a full-time hire.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">But for tasks that are highly seasonal, like filing your taxes, or you just don\u2019t require a full-time employee for your company right now, outsourcing can be a great option for reducing operating expenses.<\/span><\/p>\n<h2 class=\"heading h2\"><span style=\"font-weight: 400;\">With an operating expense formula you can take your first step toward reducing OpEx<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">By knowing exactly what operating expenses for your business are,\u00a0 it will be easier to find creative ways to reduce expenses, but keep product quality high and prices fair\u2014making more money overall.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">One way might be to consolidate your software spending with a holistic unified communications solution like RingCentral RingEX. By bringing all your communication channels together, your monthly subscription spending could come right down.\u00a0<\/span><\/p>\n<p><a href=\"https:\/\/www.ringcentral.com\/view_demo.html#cc\"><span style=\"font-weight: 400;\">Sign up now to unlock our free demo<\/span><\/a><span style=\"font-weight: 400;\">.<\/span><\/p>\n<h2 class=\"heading h2\"><span style=\"font-weight: 400;\">Operating expense formula FAQs<\/span><\/h2>\n<h3 class=\"heading h3\"><span style=\"font-weight: 400;\">What is an operating expense formula used for?<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">An operating expense formula is used to calculate your business\u2019 operating expense ratio. Operating expenses include everything you have to pay for as part of your business that isn\u2019t directly related to goods and services.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Examples of costs that you must take into account when using the operating expenses formula are the cost of office furniture and your staff\u2019s salaries.<\/span><\/p>\n<h3 class=\"heading h3\"><span style=\"font-weight: 400;\">What costs should I not include when using the formula for operating expenses?<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">When using the operating expense formula, it\u2019s important to remember <\/span><b>not<\/b><span style=\"font-weight: 400;\"> to include costs such as lawsuit settlements, bank fees, restructuring costs, and depreciation, which don\u2019t count among your day-to-day costs. You should also omit costs directly related to producing goods or services.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>As the saying goes \u201cYou\u2019ve got to spend money to make money.\u201d and, of course, it\u2019s true. When you take into account the costs associated with an office or shop location, insurance fees, payroll, and even office supplies, the costs soon mount up.\u00a0 But to really understand your bottom line, you have to organize and &#8230;<\/p>\n","protected":false},"author":29,"featured_media":56867,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[17901],"tags":[640,26137],"class_list":["post-34906","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-leadership","tag-business-expenses","tag-operating-expenses"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v19.3 (Yoast SEO v27.2) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Operating Expenses Formula: How to Calculate &amp; Reduce OpEx<\/title>\n<meta name=\"description\" content=\"Learn a simple operating expenses formula for calculating OpEX. 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