Overhead Costs

Overhead Costs

Overhead Costs Jonathan Poland

Overhead costs, also known as “indirect costs” or “indirect expenses,” are the costs that a company incurs in order to operate its business, but which are not directly related to the production of its goods or services. These costs include expenses such as rent, utilities, insurance, and administrative salaries.

Overhead costs are different from direct costs, which are costs that are directly related to the production of a company’s goods or services, such as the cost of materials or labor. While direct costs are typically included in the calculation of a company’s cost of goods sold, overhead costs are typically considered to be separate from the cost of goods sold and are not included in that calculation.

Overhead costs are an important part of a company’s operating expenses, as they represent the costs associated with running the business. These costs are typically included in a company’s income statement, along with other operating expenses such as the cost of goods sold and selling, general, and administrative expenses.

Managing overhead costs is an important part of running a successful business, as it can help a company to control its expenses and improve its profitability. By carefully controlling and minimizing its overhead costs, a company can increase its gross profit and net income, and improve its overall financial performance.

Learn More…

Experience Economy Jonathan Poland

Experience Economy

The concept of the experience economy suggests that companies can differentiate themselves…

Examples of Respect Jonathan Poland

Examples of Respect

Respect is the recognition and understanding of the inherent value and worth…

Market Position Jonathan Poland

Market Position

The market position of a brand, product, or service refers to its…

Waste is Food Jonathan Poland

Waste is Food

The concept of “waste is food” is based on the idea that an industrial economy should not produce any waste except for biological nutrients that can be safely returned to the environment.

Market Potential Jonathan Poland

Market Potential

Market potential is the entire size of the market for a product at a specific time. It represents the upper limits of the market for a product. Market potential is usually measured either by sales value or sales volume.

Risk Management Jonathan Poland

Risk Management

Risk management is the process of identifying, assessing, and prioritizing risks in…

User Story Jonathan Poland

User Story

A user story is a concise description of a specific expectation or…

Ways of Thinking Jonathan Poland

Ways of Thinking

Ways of thinking refer to the mindsets and approaches that individuals use…

What Is Innovation Capital? Jonathan Poland

What Is Innovation Capital?

Innovation capital is a form of intellectual capital that refers to the…

Jonathan Poland © 2023

Search the Database

Over 1,000 posts on topics ranging from strategy to operations, innovation to finance, technology to risk and much more…

Product Development Jonathan Poland

Product Development

Product development is the process of designing, creating, and launching new products.…

Blockchain Jonathan Poland


Blockchain is a type of distributed database that allows multiple parties to…

Risk Mitigation Jonathan Poland

Risk Mitigation

Risk mitigation is the process of identifying, analyzing, and taking steps to…

Employee Development Jonathan Poland

Employee Development

Employee development is the process of providing employees with learning and experience…

Brand Management Jonathan Poland

Brand Management

Brand management is the process of creating, developing, and managing a brand…

What Is Analysis? Jonathan Poland

What Is Analysis?

Analysis is the process of breaking something down into its component parts…

Strategic Advantage Jonathan Poland

Strategic Advantage

A strategic advantage refers to a position that gives a company an…

What is a Business Model? Jonathan Poland

What is a Business Model?

A business model is a plan or framework that outlines how a…

Management Levels Jonathan Poland

Management Levels

A management level is a layer of accountability and responsibility in an…