Fixed Expenses

Fixed expenses are those that you seem to always have running your business, like paying rent, utilities or buying office supplies.  Fixed expenses can reoccur each month or may just happen once.  Employees, insurance, monthly payments, purchasing equipment, and paying for a subscription are some more examples of fixed expenses.

Variable Expenses

Variable expenses on the other hand are directly tied to the sales of your products and services.  If you are a painter and work more hours, typically you will need more paint so your paint is a variable expense.  Put simply, if an expense increases as your sales increase then it is a variable expense.   Some types of businesses may have none or very little fixed expenses.  Someone who is a consultant who charges per hour may not incur any more expenses as they increase the amount of hours they are consulting each month.  

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