Overhead is a term used by people who are overhead. No one wants overhead. No one wants to be overhead. No one wants to pay for overhead. But we’re all basically overhead.
Pity the Poor, Ignoble Overhead
Overhead refers to the costs a company incurs for expenses that are not directly related to whatever is being produced. Typically, these are “fixed” costs, costs that don’t change regardless of how many hamburgers are flipped or customer calls are handled. Examples might include everything from the CEO’s salary to the desks to the fees for Internet connectivity.
Most people, when they think about paying for a product, focus on only the product itself. I should only have to pay for the sandwich. How can it cost so much to make a pill? They think of a product as only the sum of the ingredients, rather than factoring in the distribution, packaging, design, testing, communication (advertising), inventory, or any number of other costs that have to exist in order for them to have the ability to buy that thing at that time at their convenience.Continue reading “O is for Overhead”