What is Fixed Cost?
A fixed cost is an expense that stays about the same each month whatever the amount sold, such as shop rent or a salaried employee.
Updated
Meaning
English
A fixed cost is an expense that stays about the same each month whatever the amount sold, such as shop rent or a salaried employee.
Roman Urdu
Fixed cost woh Expense hai jo Sale kam ho ya zyada, har mahine taqreeban ek jaisa rehta hai, jaise kiraya ya tankhwah.
Also called fixed expense, monthly cost.
Example
A bakery pays 80,000 rupees rent every month. It is the same in a slow week or in Eid week.
Why it matters
Fixed costs set the minimum you must earn each month. The more fixed costs you have, the more sales you need to break even; see break-even point. Compare with variable cost, which moves with sales.
In Nafaa
Nafaa lets you record recurring expenses by category and read them against profit in reports. See business reports.
Related terms
- Variable Cost
A variable cost is an expense that rises and falls with the amount sold or produced, such as the cost of goods, packaging or delivery.
- Overhead
Overhead is the ongoing cost of running a business that is not tied to making or selling a single item, such as rent, electricity, salaries and internet.