Capex Opex capital expenditure capex meaning capital expenditure examples CapEx versus Opex

Transcript: "Opex capex are two fancy terms that sometimes confuse techies when measuring business profitability. Capex or capital expenditures are the money spent on assets that the company ends up owning after paying the price, while opex are expenses on services and salaries needed for running operations that’s why they are called operational expenditure. Depending on the company’s strategy leaders decide for the capex or opex option. F,e. when the teams grow, renting new offices enhances the operational costs. The capex alternative would be buying a new building which improves the tangible assets values of the company and offers long term tax deduction benefits. The CAPEX way would be advantageous for assets that increase in value like real estate. In case of assets that lose value over time like devices, and cars leaders would jump to the opex option. And such choices can even mirror the core business and the target customers. F.e two competitors building similar 3d modelling software for mechanical engineers and pivoting from selling their licences on cd to distributing their solutions over cloud. The first one started building the whole server infrastructure in house and hiring IT administrators and security experts. The second company prioritizes focusing on the software development and lets cloud services providers like Amazon, GCP or Microsoft Azure take care of the stable delivery. From those strategic decisions they revealed heir value propositions which are respectively 3d modelling cloud solution with high customer#s data security and average cloud solution delivery. Exactly the opposite is required by the customers of the second company: First flawless and stable cloud services and average data security. The benefits of opex over capex though is letting the company management shift the energy from managing everything to managing only people in their circle of competencies and beyond that they just hold third party service providers accountable for results.. Like a company focusing on building pick and place AI-robots. So they would put more focus on their machine learning, deep learning and machine vision engineers and buy the rest services like manufacturing and assembling the robot parts or renting offices including security and cleaning services etc Furthermore the option of operational expenditures has more flexibility and makes taking decisions easier and faster because of the bigger amount of money needed to be put on the table upfront in the case of capex and the difficulty of getting rid of those capex items. With a phone call or online form submission we can upgrade or downgrade services like renting coworking spaces, or leasing cars, booking servers but not byuign ir selling 10 million dollar building or 1 million it infrastructure or 100k car. After that this is just a comparison between capex and opex to apply them wisely at the right time for our new invention projects. F.e. If your invention requires high capital budgets, start with the opex option and when the invention proves its profitability on the market then it is easier to ask for higher budgets for operational as well as capital expenditures. "