Overhead
Last updated June 15, 2026
Definition
Overhead is the recurring operating cost of running an organization that is not tied to producing or selling any single product. It covers the standing expenses a business pays month after month to keep the lights on, and it tends to drift upward when no one reviews it.
Because overhead is paid on a recurring schedule rather than approved purchase by purchase, it rarely gets the scrutiny a large one-time expense would. The agreements behind it are signed once and then renew quietly, so the amount paid can climb well above the current market rate before anyone notices.
A dollar of overhead removed falls straight to the bottom line, since it carries no cost of sale. That is why reviewing recurring costs is one of the most direct ways to improve profit without adding revenue.
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