Fixed costs definition

Fixed costs are the costs incurred by a company that do not vary with the scale of production. They are one of two main types of cost associated with companies’ balance sheets: the others are variable costs.

There are many different fixed costs that a business will encounter, but they are all tied together by one thing. Unlike variable costs, fixed costs will remain the same regardless of whether the business stops producing goods and services for a space of time, or ramps up production.

One example of a fixed cost could be a licence that is needed for the business to operate each year but does not change in price if production increases. If production then increases, the value achieved through the licence increases but the cost does not. As such, fixed costs are key to increasing economies of scale.

Visit our shares section

See the costs of different companies in our shares section.

A - B - C - D - E - F - G - H - I - L - M - N - O - P - Q - R - S - T - U - V - W - Y

See all glossary trading terms

Help and support

Get answers about your account or our services.

Get answers

Or ask about opening an account on 0800 195 3100 or newaccounts.uk@ig.com.

We're here 24hrs a day from 8am Saturday to 10pm Friday.

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.