An explicit cost is a direct payment made to others in the course of running a business, such as wage, rent and materials, as opposed to implicit cost

Implicit cost

In economics, an implicit cost, also called an imputed cost, implied cost, or notional cost, is the opportunity cost equal to what a firm must give up in order to use factors which it neither purchases nor hires. It is the opposite of an explicit cost, which is borne directly...

s, which are those where no actual payment is made. It is possible still to underestimate these costs, however: for example, pension contributions and other "perks" must be taken into account when considering the cost of labour.

Explicit costs are taken into account along with implicit ones when considering economic profit. Accounting profit only takes explicit costs into account.