📖 Business terms
Fixed vs variable costs
Costs that stay put vs costs that grow with sales.
Fixed costs (rent, salaries, software) stay the same whether you sell 10 units or 10,000. Variable costs (materials, delivery, commissions) rise with every unit.
The mix decides how risky and how scalable a business is.
How to break it down
Cost
Fixed: rent, salaries
Variable: materials, delivery
🧮 Example
A cinema is mostly fixed cost — an empty seat costs almost the same as a full one, so filling seats is everything.
🎯 Interview tip
High fixed costs → focus on volume and utilisation. High variable costs → focus on unit cost and price.
Learn next
The Case Flex weekly
One concept. One case breakdown. One practice prompt. Every week, in simple words.
Practise Fixed vs variable costs in a real case
An AI interviewer runs you through a case, pushes back, and scores your reasoning. Free to start.
Try a free case