Overhead costs in an online shop: the bills that don't care how many orders came in
The bills that arrive whether this month was busy or dead quiet: people, software, space and advice. Growth spreads them thinner. Neglect lets them creep.
- 101Overhead Costs
- Ongoing business expenses not directly attributed to creating a product or service, such as rent, utilities, and salaries.
- Typical lines
- Salaries, software, rent, insurance, accountants and agency retainers
- Not the same as
- Cost of goods, postage and payment fees, which rise with every order
- Where email sits
- Your email platform bill, which grows with the size of your list
- Check them
- Every subscription on the company cards, once a quarter
Overheads versus the costs that arrive with each order
Some costs turn up with every order: the product, the postage, the payment fee, the box it ships in. Overheads don't. They're the cost of having a shop at all, and they're the same whether Tuesday was quiet or the best day of the year.
- People: salaries, freelancers, and the founder, if you pay yourself
- Software: your Shopify plan, the apps, the email platform, the helpdesk
- Space: an office, a unit, or warehouse space you rent
- Advice and cover: the accountant, legal help, insurance and any agency retainer, ours included
Which pile a cost goes in is your accountant's call, and none of this is financial advice. What matters is knowing the difference, because the two piles behave very differently as you grow.
Why overheads shrink per order as you grow, then creep back
Overheads are why growth starts to feel easier. The same team, the same software and the same rent, spread across more orders, take a smaller bite out of each one.
Then they creep: an app installed for one sale and never removed, two tools doing the same job, a subscription on the card of somebody who left in the spring. Nobody decides to spend the money. It just renews, and the fix takes an afternoon.
- Export a quarter of transactions from every company card and account
- Write next to each subscription who uses it, and for what
- Cancel anything nobody can explain in one sentence
- Put the next check in the diary for next quarter
Your email platform is an overhead that grows with your list
Think about what you're paying your email platform for. Klaviyo prices on active profiles, and a suppressed profile doesn't count towards them; its help centre sets out how. So every address that hasn't opened anything in a year is costing you money, and if you're still mailing it, dragging your deliverability down too.
A sunset flow asks those people whether they still want to hear from you, then suppresses the ones who don't answer. It's housekeeping that can show up on the next invoice.
The other side of it: a returning customer doesn't need winning twice. An order from somebody already on your list, brought back by the winback flow or a replenishment reminder, rides on overheads you're paying anyway.
Related terms
FAQs
Is advertising an overhead?
Usually not. Most online shops track ad spend on its own line, because it rises and falls with how hard you're chasing orders. Postage and payment fees sit with the orders too. How your accounts present it is your accountant's call, so ask once and keep it consistent.
Are overheads the same as fixed costs?
Close, not identical. Most overheads are fixed in the short run, like rent and salaries. Some creep with size, like an email platform priced on your list or software priced per seat. What makes something an overhead is that it isn't tied to a single order, not that it never changes.
How do I cut overheads without slowing growth?
Start with software, because it's the line nobody owns. Cancel what nobody uses, merge tools that overlap, and suppress the unengaged in your email platform before you tip into the next pricing tier. Leave the people, and the work that brings customers back, until last. Those are the cuts you feel in next quarter's sales.
Rather we explained it on your own account?
Bring your Klaviyo account to a growth consultation. We'll walk through what this means for your numbers, in plain English, and what we'd fix first.
Half an hour with Theo, our founder.
We're all about relationships built on trust, mutual respect and a shared vision for success. If that sounds like your vibe, let's make some waves together 🌊
