Finance · business glossary
What is Fixed costs?
By Shivam Bhandari · Reviewed 31 October 2026 · How we write
definition
Costs that stay roughly the same regardless of how much you sell, like rent or salaried staff.
Fixed costs explained
Fixed costs stay roughly the same each month regardless of how much you sell — rent, salaried staff, insurance, software subscriptions and loan instalments.
example
A café pays ₹80,000 rent and ₹1,20,000 salaries every month whether it sells 100 or 1,000 coffees — ₹2 lakh of fixed costs.
why it matters
High fixed costs raise the break-even point and make a business riskier when sales drop.
common mistake
Treating every cost as fixed — many can be made variable through outsourcing or commission-based pay.
Frequently asked questions
What is Fixed costs?
Costs that stay roughly the same regardless of how much you sell, like rent or salaried staff. Fixed costs stay roughly the same each month regardless of how much you sell — rent, salaried staff, insurance, software subscriptions and loan instalments.
Why does Fixed costs matter?
High fixed costs raise the break-even point and make a business riskier when sales drop.
What is a common mistake with Fixed costs?
Treating every cost as fixed — many can be made variable through outsourcing or commission-based pay.
Related terms
Variable costs
Costs that rise and fall directly with how much you produce or sell, like raw materials or packaging.
Break-even point
The sales level at which total revenue exactly equals total costs, with no profit and no loss.
Burn rate
How fast a business is spending its cash reserves each month, typically used when a business is running at a loss funded by savings or investment.