OpEx
Definition
OpEx stands for Operating Expenses.
- It refers to the ongoing costs of running a business or system — the money spent on day-to-day operations.
- In contrast to CapEx (Capital Expenditures), which are long-term investments (e.g., buying servers, equipment), OpEx covers recurring costs (e.g., salaries, rent, cloud usage).
Examples of OpEx
- Business Context
- Employee salaries
- Rent and utilities
- Office supplies
- Marketing & advertising
- Maintenance
- Tech / IT / ML Context
- Cloud compute costs (AWS, GCP, Azure)
- Data storage (S3, BigQuery, Snowflake)
- Model inference costs (GPU time per prediction)
- Third-party API usage fees
- Monitoring / logging system subscriptions
Why It Matters
- Financial reporting: OpEx is deducted from revenue to calculate operating profit.
- Budgeting: Businesses track OpEx to control recurring costs.
- ML/AI systems: Reducing OpEx (e.g., more efficient models → fewer GPU hours) makes deployments sustainable.
Comparison: CapEx vs. OpEx
| CapEx (Capital Expenditures) | OpEx (Operating Expenses) |
|---|---|
| One-time, upfront investments | Recurring, ongoing costs |
| Assets with long-term use (servers, buildings) | Daily operations (cloud usage, salaries, electricity) |
| Capitalized (depreciated over time) | Expensed immediately in income statement |
Example
- A company buys servers for $500k → CapEx.
- It pays $50k per month for cloud hosting, salaries, and electricity → OpEx.
Summary
OpEx (Operating Expenses) = ongoing costs required to keep a business or ML system running (cloud, salaries, rent, monitoring, etc.).
It’s the opposite of CapEx, which is about one-time investments.