> For the complete documentation index, see [llms.txt](https://help.modelreef.io/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://help.modelreef.io/help/drivers-variables-and-timing/opex-variables.md).

# Opex Variables

This article explains **Opex (Operating Expenses) variables** in Model Reef.

You will learn:

* What an Opex variable represents.
* How Opex variables differ from COGS and Staff variables.
* How Opex affects P\&L, Balance Sheet and Cashflow.
* Patterns for modelling fixed, variable and semi variable operating costs.

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### What an Opex variable is

An **Opex variable** represents an operating expense that is not classified as COGS or Staff, for example:

* Marketing and advertising spend.
* Rent and utilities.
* Software subscriptions and tools.
* Professional services and consulting.
* Insurance and office overheads.

Each Opex variable:

* Lives in the branch where the cost is managed or controlled.
* Has a category such as `Opex - Marketing`, `Opex - Rent`, `Opex - Other`.
* Participates in EBITDA and operating cashflow.
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### Opex vs COGS vs Staff

Key distinctions:

* **COGS**
  * Direct costs that sit above Gross Profit and are closely tied to revenue.
  * Examples: cost of goods sold, direct production labour, hosting directly tied to use.
* **Staff**
  * Employee costs with payroll behaviour, often including salary, oncosts and timing for wages, super or pension and payroll tax.
* **Opex**
  * Everything else that is operational but sits below Gross Profit.
  * Often includes marketing, overheads and administrative expenses.

Choosing between these types affects where the cost appears in the P\&L and how it is analysed, but the timing engine handles payables and cashflow the same way.
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### How Opex variables use drivers

Opex variables can be:

* **Fixed per period**
  * Example: rent or software subscriptions charged per month.
  * `Opex = FixedAmount`.
* **Variable with activity**
  * Example: marketing spend per order or per customer.
  * `Opex = ActivityDriver * CostPerUnitDriver`.
* **Escalating over time**
  * Example: overheads growing with inflation.
  * `Opex = BaseCost * InflationIndex`.

You can use presets for recurring schedules, escalation patterns or ML based extensions from history.
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### Opex in P\&L and EBITDA

In the **P\&L**:

* Opex variables reduce EBITDA.
* Categories and subcategories let you break out costs by function, such as marketing, rent, technology or overheads.
* Staff variables are often shown separately from general Opex for clarity.

A clear Opex structure makes it easier to see which costs are strategic, which are variable and which are fixed.
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### Opex in Balance Sheet and Cashflow

In the **Balance Sheet**:

* If Opex is paid immediately, there is no payable.
* If Opex is paid after a delay, an **Accounts Payable** balance is created until cash is paid.

In the **Cashflow Statement**:

* Opex variables feed **Payments to suppliers**.
* Combined with COGS and Staff, they determine operating cash outflows.

Timing is governed by the same delay rules used for other expense types.
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### Common Opex modelling patterns

Examples:

* **Marketing**
  * Baseline marketing budget per month.
  * Additional budget linked to revenue or new customers.
  * Split across channels using subcategories and drivers.
* **Rent and property related costs**
  * Fixed per branch or store.
  * Escalating annually based on lease terms or indices.
  * Potentially replicated across branches using the Data Library.
* **Overheads and support functions**
  * Costs allocated to entities or divisions using drivers or allocation ratios.
  * Separate Opex variables for IT, HR, Finance, etc.

Opex variables help encode the cost structure of running the business beyond direct delivery of goods and services.
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***

## Related articles

* [Multi-Property Portfolio Reporting](/use-cases/real-estate-and-property/multi-property-portfolio-reporting.md)
* [Build an Opex Planning Model](/how-tos/operations-and-unit-economics/build-an-opex-planning-model.md)
* [Revenue Variables: what is, rules, what it affects](/help/drivers-variables-and-timing/revenue-variables.md)
* [Variables Syntax](/syntax/variables-syntax.md)