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24 Examples of Variable Costs

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Variable costs are business expenditures that change with business volumes such as sales and production. Variable costs can also be related to one-time initiatives such as an advertising campaign or technology project. These can be contrasted with fixed costs that aren't easy to scale back in response to business conditions. The following are common examples of variable costs.
Business Services
Cloud Computing
Cost of Goods Sold
Freight & Shipping
Hourly Wages
Incentives & Bonuses
Legal Fees
Partner Commissions
Professional Services
Raw Materials
Recruiting Costs
Sales Commissions
Transaction Fees
Workforce Reductions


Cost of goods sold is the cost of your inventory that has been sold. In many cases, most variable costs can be attributed to this measure.
An easy way to think of variable costs is anything that can easily be cut in a recession or a cost that increases due to improved sales.
Workforce reductions are the costs to layoff employees. This can be contrasted with outsourcing contracts that allow you to reduce costs without penalty.
Cloud computing is a class of software, telecommunications and IT infrastructure services that allow you to scale up and down with demand.
Utilities are customarily listed as a fixed cost despite the fact that these can be highly variable.
Overview: Variable Costs
Definition (1)
Business expenditures that change in proportion to the level of goods or services that a firm produces.
Definition (2)
Business expenditures that change with sales volumes, production volumes or tactical initiatives such as an advertising campaign.
Related Concepts

Business Costs

This is the complete list of articles we have written about business costs.
Applied Cost
Business Equipment
Capacity Cost
Capital Improvement
Carrying Costs
Closing Costs
Cost Of Capital
Cost Of Revenue
Cost Of Living
Direct Cost
Distress Cost
Fixed Costs
Friction Cost
Employee Costs
Holding Costs
Intangible Cost
Marginal Cost
Operating Cost
Operating Expenses
Legacy Costs
Outlay Cost
Lifetime Cost
Overhead Costs
Menu Costs
Relevant Cost
Normal Costs
Sunk Costs
Tangible Cost
Operational Costs
Travel Expenses
Unit Cost
Opportunity Cost
Variable Costs
Prospective Cost
Semi Variable Cost
Step Costs
Switching Costs
Transaction Costs
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