Operating expenses are everything it costs to run the business that is not directly tied to producing what you sell. For a Shopify subscription store, that means the team, the tools, the marketing spend, the warehouse rent, and the office (if you still have one) — separated cleanly from the cost of the products themselves.
The basic formula
Operating Expenses = SG&A + R&D + Other Operating Costs
- SG&A (Selling, General & Administrative) — Salaries, marketing, sales commissions, office costs, professional services.
- R&D (Research & Development) — Product development, design costs, software engineering. Often combined with SG&A for smaller businesses.
- Other operating costs — Depreciation, amortization, fulfillment overhead, customer support tooling.
What to include for a subscription business
For a typical Shopify subscription store, operating expenses break down into:
- People costs. Salaries, benefits, contractor fees. Usually the largest line.
- Marketing. Paid ads, influencer fees, affiliate commissions, content production.
- Software and platform fees. Shopify subscription, app fees (Joy and others), email platform, analytics tools, customer support software.
- Fulfillment overhead. Warehouse rent, packaging design, fulfillment staff (the unit-economic variable portion goes in COGS, the fixed overhead in OpEx).
- Professional services. Accounting, legal, agency retainers.
- Office and infrastructure. Rent, utilities, equipment, IT.
What NOT to include
- Cost of goods sold. Direct product costs, per-unit fulfillment, shipping materials. These belong above the gross profit line.
- Interest expense. Non-operating; appears below operating income.
- Taxes. Non-operating; appears below operating income.
- One-time gains or losses. Asset sales, restructuring charges. Tracked separately to keep operating numbers comparable across periods.
For the broader picture see operating expenses and the distinction with non-operating expenses.