Calculating Cloud Computing Costs – CapEx vs. OpEx

Grazeed from Hosting.com.  Author: Editorial Staff.

When a company considers moving to the cloud, one of the most discussed topics is how the investment will hit their balance sheet. While calculating cloud computing costs, the terms “CapEx” and “OpEx” are often raised, but both the definitions and the advantages of the two are often. . . shall we say, cloudy? Let’s clear up some confusion.

CapEx vs. OpEx – A Quick Overview

For those of us who shied away from accounting classes in college, here’s a quick overview:…

• CapEx (Capital Expenditure) Owning an asset is commonly considered a capital expenditure. It requires payment for the entire asset and the cost becomes an entry on the company’s balance sheet, depreciated over some period of time. Some examples of capital expenditures include buildings, computer equipment or a company car.
• OpEx (Operational Expenditures) These expenditures are associated with operating the business over a short period, typically a year. All payments during this year count against the income statement and do not directly affect the balance sheet. Some examples of operating expenditures include sales, utilities and rental car fees…

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