2 min read
Definition
Fixed costs are the costs a business pays regardless of how much it produces or sells — rent, salaries, insurance, software subscriptions. They contrast with variable costs, which move with output.
In plain terms
These are the bills that arrive whether you have a busy month or a dead one. They form the base you must cover before any profit is possible.
Why it matters for your company
High fixed costs raise your break-even point and operating risk — a quiet month hurts more. Understanding your fixed-cost base is central to cash-flow planning and knowing how resilient the business is.
Related reading
Variable costs
Variable costs rise and fall with output — materials, direct labour, delivery — the costs tied to each unit…
Read →
Break-even point
The break-even point is the sales level where revenue exactly covers all costs — the line you must cross…
Read →
Fixed vs variable costs
Fixed costs stay broadly the same whatever you produce; variable costs rise and fall with output. The split…
Read →Fixed costs
Fixed costs are the bills that stay roughly the same whether you sell a little or a lot — rent, core…
Read →Funding for UK limited companies
Credicorp lends to your company, not to you personally — short-term working capital with no personal guarantee. See what your business could access.