Operating costs refer to the expenses incurred by a business or organization while it is actively operating. These include all the day-to-day expenditures that are necessary for keeping the business running, such as rent, utilities, salaries and wages, supplies, marketing and advertising, insurance premiums, taxes, and other miscellaneous costs. Operating costs do not typically include capital expenses or one-time investments in assets like buildings or equipment. The total operating cost is an important measure of a business's financial health and profitability, as it indicates the amount of revenue needed to cover all ongoing expenses and generate a profit.