Operating Cost (Noun)
Meaning
The expense of maintaining property (e.g., paying property taxes and utilities and insurance); it does not include depreciation or the cost of financing or income taxes.
Classification
Nouns denoting possession and transfer of possession.
Examples
- The company's operating cost for maintaining the old office building was significantly higher than expected due to high utility bills and insurance premiums.
- By outsourcing their facilities management, the corporation was able to reduce its operating cost and reallocate the savings towards employee training programs.
- Property investors carefully review the operating costs of potential acquisitions to determine their viability and potential for long-term returns.
- The concept of net operating income involves subtracting a property's operating cost from its gross income to determine its profitability.
- When evaluating the viability of their proposed development project, the investors considered not only the initial construction cost but also the ongoing operating cost of maintaining the structure.