Tips

Fixed plus variable cost

By 
Matt Hoffman
October 18, 2020

The Startup Alpha Business Canvas includes fixed costs and variable costs. The simple equation to remember is that Fixed Costs + Variable Costs = Total Costs (FC + VC = TC). (Part 2 of 3)

Fixed costs are incurred regularly and are unlikely to fluctuate over time.  Examples of fixed costs are overhead costs such as rent, interest expenses, property taxes, and depreciation of fixed assets.

Variable costs are expenses that vary with production output. Examples of variable costs include direct labor costs, direct material cost, utilities, bonuses and commissions, and marketing expenses.

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