What is a variable cost?
Variable cost: A cost that grows with every item made or sold, for example ingredients or a fee per order.
Example
For every bun Nora sells: ingredients $1.20, a paper bag $0.15 and a card payment fee $0.15. Her variable cost is $1.50 a bun.
Made-up people and numbers from the cases of our course; the math is real.
A common mistake
Forgetting the small costs that come with each sale: packaging, payment and platform fees, delivery.
Try it with your own numbers: Break-even calculator (free, no sign-up).
Practise this in block 1
Block 1 of Ownwise is free, with no account needed to start: short lessons on costs, margin and break-even, then a made-up case where you make the decisions.