Overhead Costs

ˌouv.ə.ˈhed ˈkɑːsts / Overhead Costs


Overhead costs are business expenses that are not associated with the creation of a product or delivery of a service.

They cover various expenses, such as office space rental and administrative costs. For every business, they are critical in budget management and costing.

Fixed and variable are the two kinds of overhead costs.

Fixed costs remain the same every month, regardless of a company's sales volume. These may include salaries, insurance premiums, membership dues, subscriptions, and rent.

On the other hand, variable costs vary month on month due to a business's sales and other factors such as seasonal fluctuations. These expenses may cover office supplies, advertising spends, and printing and packaging.

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