General Question

truth_seeker27's avatar

What percentage of a company's overhead is electricity costs?

Asked by truth_seeker27 (32points) February 5th, 2010

When determining the annual operating cost for a typical business, about how much (percentage) could be expected to be the cost for electricity utilities?

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10 Answers

CyanoticWasp's avatar

What, please, is a “typical” business?

In aluminum smelting (which I grant is not at all “typical”) then the bulk of the cost of the operation (probably even exceeding labor and ore cost) is for the electricity to run the furnaces. For a farm, I expect that electricity costs are quite a bit lower. For a library, perhaps lower still.

What kind of business do you have in mind?

Snarp's avatar

I don’t really have an answer for you, but I think you would need to be a little more specific than a “typical business”. Different businesses can have very different electricity consumption, and if you are billed at variable hourly rates then the hours of operation can play a big role in the electricity bill.

jfos's avatar

Less than 100% ... Be more specific.

truth_seeker27's avatar

you’re right, Wasp…. aluminum smelting is not a typical business.

Examples of typical businesses: Sales Office, Fast Food Restaurant, Insurance Company, Bank, Clothing Store

I just need an average, people.And I’m not talking about the rates or the plans just an estimated percentage of expense…. no need to overthink it.

truth_seeker27's avatar

In terms of overhead…......a company will pay for the facility, the utilities and the initial supplies to begin operation.

All things being equal, the estimates for percentage of that being electricity, it’s not all THAT disproportionate.

jfos's avatar

If there is a lot of equipment, depreciation will push down the percent that reflects what electricity contributes. Other factors are indirect labor, indirect materials, utilities, property taxes, etc. I don’t think that electricity would account for more than half of the overhead, but I’m sure it does in some cases.

pjanaway's avatar

Depends, even if you had like 20 computers it wouldn’t be overly much. Also different country’s have different costs.

CMaz's avatar

I run a TV Station. That is “typical”, they are everywhere.

I would say our electric is around a third of C of O.

richardhenry's avatar

You’re really talking about a “typical retail business” as opposed to a “typical business”.

This isn’t something best looked at in terms of a percentage. Because salaries and employment costs are the largest overhead, two identical scenarios where one store has three employees and the other has two would produce two very different percentage of overheads occupied by utilities despite the cost of utilities being the same. It’s a bit of a nonsense statistic, basically, when looking at a small business.

All of this said, you would expect no more than 2–10% of overheads would be utilities for a single (not a chain) retail store with 4 or 5 employees including the owner.

Hope this helps!

mattbrowne's avatar

Huge if you’re running a data center.

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