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Business Expense Ratio Calculator

Analyse your business expenses as a percentage of revenue across key categories. Identify your largest cost drivers and calculate your operating margin to assess profitability.

Expense Analysis

Break down your business expenses across key categories

Category Breakdown

See each expense as a percentage of total revenue

Operating Margin

Calculate your operating margin to assess profitability

Expense Ratio Calculator

Analyse your business expenses relative to revenue

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Your total business revenue for the period

Expense Categories

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Ready to Analyse

Enter your revenue and expenses to see your expense ratios and breakdown

Industry Expense Ratio Benchmarks

Compare your expense ratio against typical ranges for different industries

Professional Services

60 - 75%

Accounting, legal, and consulting firms. Salaries are typically the largest cost driver.

Retail & Wholesale

75 - 90%

Higher ratios due to cost of goods sold, rent, and staffing requirements.

Technology & SaaS

50 - 70%

Lower marginal costs allow better margins at scale. R&D is often the biggest expense.

Construction & Manufacturing

80 - 92%

Material costs, labour, and equipment drive higher expense ratios in these sectors.

Hospitality & Food Service

85 - 95%

Thin margins with high costs for ingredients, rent, and service staff.

Healthcare & Medical

65 - 80%

Staff costs and equipment are primary drivers. Compliance costs also contribute.

Expense Ratio FAQ

Common questions about business expense ratios and profitability analysis

A business expense ratio (also called the operating expense ratio) measures your total operating expenses as a percentage of revenue. It shows how much of each rand earned is consumed by expenses. A lower ratio generally indicates a more efficient business, though the ideal ratio varies significantly by industry.
There is no single "good" ratio as it varies by industry. Service businesses often have ratios of 60-80%, retail businesses 75-90%, and technology companies 50-70%. The key is to benchmark against your industry peers and track your ratio over time to identify trends and areas for improvement.
Operating margin is calculated as (Revenue - Total Operating Expenses) / Revenue x 100. It represents the percentage of revenue that remains after covering all operating costs. A positive operating margin means the business is profitable at the operational level, before accounting for taxes and non-operating items.
Key categories include rent and utilities, salaries and wages, marketing and advertising, administrative and office expenses, professional services (accounting, legal), insurance, and a catch-all for other expenses. Breaking expenses into these categories helps identify which areas consume the most resources and where savings may be possible.
Focus on the largest expense categories first for maximum impact. Common strategies include renegotiating supplier contracts, reducing office space costs with hybrid work, automating repetitive tasks, reviewing subscription services, and improving marketing ROI. Always ensure cost-cutting does not compromise the quality of your product or service.

Important Disclaimer

Accounter does not provide accounting, tax, business or legal advice. This calculator has been provided for information purposes only. You should consult your own professional advisors for advice directly relating to your business.