What’s the difference between Opex and Capex?

What’s the difference between Opex and Capex?

OpEx and CapEx is terminology used often in corporations to categorise spend. Here’s a simplistic way to think about it:

If you were to close a business down and hold a garage sale, broadly speaking the items that you could sell on would be from capital expenditure (CapEx) and all the things you wouldn’t be able to sell would be operational expenditure (OpEx).

CapEx would be items like tables, chairs, laptops, vehicles. It is often seen by a business as an investment.

OpEx would be things like broadband, electricity, licences. It is often seen as a necessary overhead.

Why is this necessary to know in tech product? Well, often a software product built by an in-house team, like an app, is frequently seen as CapEx spend – as often are the team members who build it. This is because the software product could be sold or capitalised.

As capital spend is seen as an investment, this can mean that the product team have a semblance of greater stability in their roles, which can mean greater leverage in negotiations within the business.


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