Fixed Costs - GCSE Business Definition

Fixed costs are paid by businesses regardless of the level of output. For GCSE Business students, it's important to understand that fixed costs do not change with the level of production or sales activity. Examples include rent, salaries of permanent staff, and insurance. These costs must be distinguished from variable costs, which fluctuate with the business's output. Knowing how to identify and manage fixed costs is crucial for calculating overall expenses, setting pricing strategies, and planning the financial health of a business.