CapEx vs. OpEx in SaaS: A Practical Guide

What are the different categories of expenses in SaaS?

SaaS companies’ expenses typically fall into three main buckets: cost of goods sold (COGS), capital expenditures (CapEx), and operating expenses (OpEx). 

COGS represents the direct cost of delivering your product such as infrastructure tied to user usage, support for onboarding, or third-party integrations your platform uses to support its customers. Once those are accounted for, the remaining spending falls into either OpEx or CapEx, each of which has very different implications for your financial model, tax treatment, and investor opinion.

OpEx vs. CapEx: What makes them different isn’t just what you spend, but why you spend it. 

OpEx keeps the business running today while CapEx builds capabilities for tomorrow. If your team purchases a CRM tool on a monthly plan, that’s OpEx. But if you invest six months into building a proprietary CRM integration for long-term use across your company, that may qualify as CapEx because it's a long-lived internal asset that enhances future productivity.

This distinction matters not only for tax purposes but also for what your spending reveals about your growth strategy. Proper classification is important for helping investors understand the why behind your spending as they tend to more closely scrutinize OpEx-heavy SaaS businesses for signs of bloated GTM or R&D functions.  

Between CapEx, OpEx, it is OpEx that often commands the most attention. This is  because it tells the story of how efficiently you run the business, including how you acquire users, support them, pay your engineers, and scale infrastructure. 

Understanding what qualifies as OpEx is important because in SaaS, how you classify and track OpEx can impact your margin profile, forecasting accuracy, and even investor confidence. So, let’s explore that first.

What are SaaS operating expenses?

Operating expenses (OpEx) are the costs associated with running the business day-to-day, but not producing the product itself. Unlike CapEx, which are typically longer-term investments in future growth, OpEx covers short-term outflows that are fully expensed in the same accounting period they’re incurred.

For a SaaS business, this often includes:

• Salaries and benefits for non-product staff (e.g., sales, marketing, finance)
• Software subscriptions for different teams (e.g., HubSpot, Figma, or Notion)
• Cloud hosting fees tied to business operations (not direct product delivery)
• Office rent, legal retainers, and outsourced accounting

Some expenses are easier than others to classify as OpEx. Take your design team’s Figma license, for example. It’s OpEx because it supports internal collaboration. On the other hand, the AWS spend powering your platform may fall under COGS or OpEx depending on how it’s allocated (we’ll cover that distinction below).

Categories of SaaS operating expenses

Operating expenses reveal how efficiently your business scales operations. For SaaS companies, OpEx typically falls into these categories:

• Marketing and sales: Paid acquisition, sales development representative salaries, commissions, events, and sales tools. This category directly influences customer acquisition cost (CAC) and CAC payback periods.
• Employee salaries and benefits: Often the largest OpEx component, covering non-product staff in functions like finance, human resources, design, and revenue operations.
• Software and cloud subscriptions: Collaboration tools like Slack and Notion, plus cloud compute for internal systems. 
• Professional services: Legal counsel, compliance consultants, audit support, and outsourced human resources that enable scale and reduce risk.
• Support and maintenance: Customer support salaries, helpdesk software, and bug-fixing operations that influence retention and customer experience. This category directly influences the lifetime value (LTV) of your customers.

Fixed OpEx vs. variable OpEx in SaaS

While it can be useful when forecasting different revenue scenarios, SaaS finance teams often struggle to categorize OpEx in a more granular way. . Here’s how you can think about them:

• Fixed OpEx: These are operational expenses that remain stable regardless of customer count or usage. Think rent, full-time employee salaries, annual software licenses.‍
• Variable OpEx: These are operational costs that scale with business activity. This could include commission payouts, ad spend, or cloud storage for internal use.

For example, your HubSpot subscription is likely fixed (tiered annually), but your sales commissions and contractor marketing spend are variable.

OpEx vs. non-operating expenses

Non-operating expenses are costs not tied to core operations, such as:

• Interest payments on loans
• Losses from asset sales
• Foreign exchange losses

Like OpEx, these expenses appear on the income statement, but  are accounted for in a separate line item. This is because while they don’t reflect the costs of operations, they do help stakeholders understand the impact that non-operating expenses have on the company’s profitability.

How to calculate your SaaS business’ operating expenses

At a high level, OpEx is calculated using the following formula:

OpEx = Total Expenses – COGS

This approach ensures you're excluding costs directly tied to delivering your SaaS product (which fall under COGS) and focusing only on the recurring costs of running your business operations.

Below is a practical, four-step approach to calculating your SaaS OpEx.  

1. Map out your core expense categories

Start by identifying all the functional expense categories that don’t fall under COGS or CapEx.

Make sure to use a clear description or label for any category that includes operating expenses that could easily be misclassified as COGS. For example, part of your company’s cloud expenses will be COGS as opposed to OpEx. Likewise for some of your salary expenses. 

2. Gather your financial data 

Once your categories are clearly defined, extract the actual spend for each one from your accounting system. Depending on how your system is set up, this step might involve:

• Tagging OpEx by department or cost center
• Pulling monthly or quarterly totals from your GL
• Cross-checking line items with vendor spend reports or payroll exports

3. Apply the OpEx formula

With your categorized data in hand, apply the formula:

OpEx = Total Expenses – COGS

Let’s say your company’s total operating expenses this quarter were $2.5M, and COGS totaled $600K. Your OpEx would be:

OpEx = $2,500,000 – $600,000 = $1,900,000

Note that this gives you your total OpEx. Depending on how granularly you track your expenses, you may be able to break it down further, calculating your OpEx by different expense categories for margin planning and forecasting purposes. 

4. Review trends and optimize

Once calculated, analyze how OpEx is trending over time and how it relates to:

• Headcount growth (OpEx per FTE)
• Revenue (OpEx-to-ARR ratio)
• Efficiency (e.g., CAC or marketing spend per SQL)
  

Let’s say your OpEx per employee has grown 25% while ARR has only grown 10%, it may be time to review headcount growth, software licensing, or outsourced services.

Operating expenses vs. other SaaS profitability metrics

To make informed strategic decisions and to avoid accounting missteps you need to know how OpEx interacts with other profitability metrics in SaaS. Classifying expenses incorrectly can distort critical KPIs leading to flawed forecasts or misleading investor signals. Let’s look at how OpEx compares to each.

OpEx vs. COGS

Cost of goods sold (COGS) refers to the direct costs associated with delivering your software product to customers. In a traditional business, this might include raw materials or factory labor. In SaaS, COGS typically includes:

• Hosting costs tied to actual usage (e.g., AWS tied to active customer sessions)
• Customer onboarding services or third-party tools required for delivery
• Support team salaries, if directly attributable to product fulfillment

In contrast, operating expenses—both fixed and variable—cover everything required to run the business that doesn’t directly scale with the number of customers you have or their use of your product.

Note that it can be easy to confuse some operational expenses with COGS because both include expenses that vary. However, the variable nature of some OpEx expenses—variable Opex, specifically—is driven by factors that are either completely unrelated, or at best, only indirectly related to your customer base. 

Examples of this would include sales and marketing, internal tools, office space, and HR or finance operations. While all of these expenses tend to grow as a function of the growth in your business, they do not necessarily grow in proportion with the number of customers you have like COGS does.  

Understanding these nuances matters. If you accidentally count OpEx as COGS, it makes your gross margin look better than it really is. It also skews key metrics like CAC:LTV, which  can lead to planning mistakes.

OpEx vs. cost of revenue

Cost of revenue includes all costs associated with delivering the product and servicing the customer (COGS) in addition to related functions like customer success, technical account managers, and certain infrastructure overhead. OpEx covers everything else it takes to run and grow the business such as marketing, sales, HR, and finance.

Why does this matter? Because cost of revenue affects gross margin, while OpEx affects your operating margin. Mixing the two makes it harder to understand where your business is truly efficient or bloated.

For example, if your customer success team helps users adopt the product, their salaries usually fall under cost of revenue. But your paid ad spend to acquire new customers is OpEx. Keeping this line clear helps you spot where you’re overspending and plan smarter during budgeting.

OpEx vs. gross margin

Gross margin measures how efficiently your company converts sales revenue into profit and is calculated with the following formula:

Operating expenses (OpEx) don’t factor into this formula directly, but they matter a lot when you're trying to understand the full picture of your company’s profitability.

Even if your gross margin looks healthy, high OpEx can quickly erode operating margin and cash flow. In SaaS, it's common to have strong gross margins but still struggle to hit profitability targets because of bloated spending in sales, marketing, or G&A.

For finance teams, this makes controlling OpEx just as important as managing COGS, especially as you scale. If your goal is to improve runway, efficiency, or prepare for fundraising, tightening OpEx is often the quickest lever  you can pull.

What are capital expenditures in SaaS?

While OpEx reflects the day-to-day costs of running the business, CapEx represents long-term investments in assets that support future growth.

Capital expenditures are funds used to acquire, upgrade, or maintain long-term assets such as property, equipment, or technology infrastructure. These investments are capitalized on the balance sheet and depreciated over their useful life, rather than being expensed immediately.

CapEx in SaaS typically includes:

• Internal software development costs: If your team is building a proprietary tool that will be used across departments for years, such as a billing engine or internal analytics system, portions of that R&D spend may qualify as CapEx under GAAP (ASC 350-40).
• Hardware and infrastructure: Purchasing servers, networking equipment, or edge devices to run or support your platform (particularly for hybrid or on-prem components).
• Office space improvements: Leasehold improvements or renovations made to long-term facilities often fall under CapEx.
• Large-scale system implementations: Deploying enterprise software (e.g., ERP or data warehouse tools) may include capitalizable costs if configured for long-term use.

As a rule of thumb, an expense is CapEx:

• Provides benefit beyond the current accounting period
• Enhances or extends the life of an existing asset
• Is part of a project that builds a new long-term capability

How to Calculate CapEx for Your SaaS Business

Calculating CapEx involves identifying investments in fixed, tangible assets (usually referred to as property, plant, and equipment or PP&E for short). The standard formula is:

CapEx = (Current period PP&E – Prior period PP&E) + Depreciation

If a SaaS company’s PP&E increased from $500,000 to $600,000 over a year, and the depreciation expense was $50,000, then:

CapEx = ($600,000 - $500,000) + $50,000 = $150,000

This calculation shows  any new investments in long-term assets plus the depreciation in existing investments, which is also considered an expense, during a specific period.