Variable costs
Variable costs are expenses that rise and fall with each unit sold, such as hosting per customer, payment fees and materials.
Variable costs belong to the unit, which is why they are subtracted from price before contribution margin rather than sitting alongside fixed costs.
In software they are often underestimated. Hosting, support time and payment processing all scale with customers and all reduce what each sale actually contributes.
Related terms
Keep this number live
Plainhub computes variable costs from money you record in plain words, so it is current when you need it rather than the night before a board meeting.
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