Operating Costs Explained Simply
- Operating costs are the expenses a business pays to keep its assets, machinery, equipment, or facilities running.
- Operating Costs = maintenance, repair, and inspection costs + consumption (like energy and fuel)
What Operating Costs Mean for Small and Growing Businesses
Examples of Operating Costs
- Maintenance costs (preventive maintenance and equipment repairs)
- Costs for fuel, electricity, or water (e.g., for machinery)
- Spare parts costs
- Consumable material costs (e.g., toner, oil, lubricants, filters)
- Service contracts and inspections
- Technician labor for equipment maintenance
How to track operating costs in small and medium-sized businesses?
Operating costs for individual products, assets, machines, or orders are important to you as part of TCO. You can track operating costs in your financial or ERP system. However, in practice, you often can't manage this information flexibly within them. Primarily, direct costs are tracked because they can be easily assigned to a specific piece of property, a particular machine, or equipment (e.g., the repair of one machine). Indirect costs are shared or general (e.g., electricity for the entire workshop).
What operating costs do small and growing businesses track?
- They primarily track maintenance costs (routine service, inspections, repairs, and parts replacements)
- They track direct costs for individual assets (e.g., machine, car, computer) and maintain their operational history.
- They record expenses – what, when, how much, and why (e.g., service invoice, filter replacement).
- They attach documents – invoices, contracts, notes, condition photos
- They evaluate costs in an overview (which machine is most expensive to operate, where to save, etc.)