Nov 6, 2025

Fixed Costs

• Fixed Costs are expenses that do not change with the level of production or sales

How do I remember it?

• Think of it as “The bills that keep coming no matter what."

Real world example

• Imagine you own a small bakery:

Rent for your shop: $2,000/month

Insurance: $200/month

Salaries of full-time staff: $3,000/month

• Even if you sell zero cupcakes one month, you still owe these costs!

That’s what makes them fixed!