- About us
- CFD trading
- Markets to trade
- Trading platforms
- Learn to trade
CFDs are complex instruments. 75% of retail client accounts lose money when trading CFDs, with this investment provider. You can lose your money rapidly due to leverage. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money. CFDs are complex instruments. 75% of retail client accounts lose money when trading CFDs, with this investment provider. You can lose your money rapidly due to leverage. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money.
Variable cost is a business expense which is subject to change when sales volumes change. This could mean that variable costs either increase or decrease depending on a company’s current output.
Get the latest news and market analysis from our in-house experts.
Unlike variable cost which is subject to change depending on volume of a product or service provided, fixed costs are those which do not fluctuate according to sales volumes. Fixed costs can refer to rent or contractual agreements.
While fixed costs may change over time, it is not because of changes in output. Instead, alterations in contractual agreements or changes in rents can affect the rate of payment for fixed costs.
To determine whether variable costs have increased or decreased, it is good to know how to calculate variable cost. The formula below highlights how to do this:
As an example of variable cost, let’s assume that the UK was currently experiencing an economic recession. In this scenario, companies might expect that their variable costs would decrease on the back of reduced consumer demand.
This would mean that the company might need to cut jobs or buy in less of the materials that they use to make their products.
Alternatively, if there was currently a period of economic growth, companies might expect production to increase on the back of rising demand. As a result, a company would need to buy more materials and perhaps hire more workers to make their products. Because of this, variable costs would increase in line with an increase in demand.
Discover how to trade with IG Academy, using our series of interactive courses, webinars and seminars.
Questions about opening an account: +44 (20) 7633 5430 or email: firstname.lastname@example.org
Existing client questions:
+44 (20) 7633 5431 or email: email@example.com
We’re here 24 hours a day, except from 6am to 4pm on Saturday (UTC+8).