Overhead costs are the ongoing expenses that a business incurs to operate, but that are not directly tied to producing a specific product or service. These costs include items like rent, utilities, salaries of administrative staff, and office supplies. They are essential for maintaining the business but do not directly contribute to revenue generation. Understanding overhead costs is crucial for effective budgeting and pricing strategies. By managing these expenses, businesses can improve profitability and ensure they have enough funds to cover essential operations. Properly accounting for overhead costs helps in setting prices that reflect the true cost of doing business.