Fixed costs
Fixed costs are business expenses that stay the same in the short term, no matter how much you sell or produce. You pay them even if you have no sales. They are part of your overheads and help you work out your break-even point.
Quick example
Shop rent and a monthly software subscription cost the same whether you sell a few items or a lot. Both are fixed costs.
Fixed costs differ from variable costs, which rise or fall with sales or output. Some costs can be semi-variable (a fixed part plus a usage part) or change in steps when you grow (for example, moving to larger premises). Separating fixed and variable costs makes pricing and cash‑flow planning clearer.
Typical fixed costs include:
- Rent or lease of premises
- Business rates and insurance premiums
- Fixed salaries for administrative staff
- Accounting, payroll and similar service fees
- Software subscriptions and licences
