TEis the rate of cash generated through delivery of working code into production. It is computed as sales price minus direct costs, such as packaging, delivery, installation, training, support, and networking.
Iis all money invested in software production systems plus money spent to obtain ideas for client-valued functionality. This does not apply to time spent by staff (that's Operating Expense). It does apply to the money spent on by-the-hour contractors.
- Operating Expense:
OEis all money spent to produce working code from ideas. It is primarily direct labor of software engineers, but it also includes selling, general, and administrative costs. So, our fixed overheads.