What is OPEX?
4 min read
OPEX — Operating Expenses — are the costs of running your business that aren't directly tied to making your products. They're the silent profit-killers that many brand owners undercount, or forget to count entirely.
Fixed vs. variable OPEX
Fixed OPEX stays constant regardless of how many orders you ship: office rent, permanent staff salaries, monthly subscriptions. Variable OPEX scales with business activity: Meta and TikTok ad spend, freelancers hired for a campaign, extra packaging for a busy season. Both types eat into gross profit.
The ad spend trap
Marketing spend is the biggest OPEX category for most Egyptian brands — and the most misunderstood. Many brands track ROAS (return on ad spend) and feel good about a 3× return. But ROAS doesn't account for COGS. A 3× ROAS on a product with 30% gross margin means you're barely breaking even once you add COD fees and returns.
OPEX that brands forget
Common forgotten costs: packaging materials (boxes, bags, stickers), Instagram management time or freelancer cost, returns processing labor, Shopify or platform fees, content creation costs, and customer service hours. These add up to 10–20% of revenue for many brands.
OPEX and your P&L
In your P&L, OPEX comes after Gross Profit: Gross Profit − OPEX = Net Profit. A business with 40% gross margin and 35% OPEX ratio has a 5% net margin. That means on 100,000 EGP revenue, you keep 5,000 EGP. If you don't track OPEX, you don't know this.
How to manage OPEX
Log every business expense, no matter how small. Categorize them (marketing, salaries, software, logistics, packaging). Review your OPEX monthly against your P&L. As revenue grows, fixed OPEX should shrink as a percentage — that's operating leverage working in your favor.
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