# Fixed vs Variable Costs

*Accounting & Reporting — Finicade finance glossary*

Fixed costs don't change with output — rent, salaries, insurance — while variable costs scale with each unit produced. The split determines break-even, operating leverage and how a business behaves in a downturn. The distinction is a matter of time horizon rather than nature: almost every fixed cost becomes variable given enough notice, which is why 'fixed' really means fixed within the planning period.

**Also known as:** fixed costs, variable costs, semi-variable costs

**Related terms:** [Operating Leverage](https://finicade.com/glossary/operating-leverage), [Contribution Margin](https://finicade.com/glossary/contribution-margin), [Break-Even Analysis](https://finicade.com/glossary/break-even-analysis), [Overhead](https://finicade.com/glossary/overhead), [Economies of Scale](https://finicade.com/glossary/economies-of-scale)

Source: https://finicade.com/glossary/fixed-vs-variable-costs