Education & Training
Internet & Communications
Pension Plan Contributions
NotesGenerally speaking, variable costs are preferable to fixed costs as they allow a business to quickly cut costs in response to business conditions.Business strategies are often designed to shift from fixed costs to variable costs. For example, outsourcing often reduces fixed costs.Utilities are customarily listed as a fixed cost. For some businesses, these are highly variable and should be considered as such.Advertising is often incorrectly listed as a fixed cost. This is typically one of the easiest costs to cut and is completely variable with strategy. Contracted salaries are fixed costs. Hourly wages, consulting fees and professional services are often variable costs.
|Overview: Fixed Costs|
|Definition||Costs that remain constant as business volumes and activities change.|
|Related Concepts||Variable CostsSemi Variable Cost|