Fixed Costs

Definition - What does Fixed Costs mean?

Fixed costs are an expense that a business must pay on a regular basis that has the same price regardless of the changes in the success of the business. In the context of the law, companies must pay their fixed costs in order to legally operate their business. If a company fails to pay key fixed costs, it could face legal trouble.

Justipedia explains Fixed Costs

Often, fixed costs are monthly expenses. For example, rent, utilities, salaries, and insurance are all usually fixed costs. These costs will tend to be the exact same amount month in and month out until something changes, such as rent prices going up. Fixed costs are an alternative to variable costs.

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