Fixed and Variable Costs
Fixed costs stay the same no matter how much you sell: rent, salaries, your software subscriptions. Variable costs rise and fall with every sale: payment fees, delivery, the support hours a new customer eats up. Splitting your costs into these two buckets is the foundation of understanding your business's economics.
The split matters because it tells you where your risk and your leverage sit. A business heavy on fixed costs has to hit a certain volume just to survive, but past that point extra sales are wildly profitable. A business heavy on variable costs is safer in a downturn but harder to scale into fat margins. Knowing the split reveals your break-even point and guides whether to commit to a fixed expense or keep it flexible.
A few concrete examples. Say you onboard your team with Trainual: the monthly seat fee is a fixed cost, it doesn't move whether you close one deal or fifty. Now say your support runs through Gorgias and you pay per resolved ticket: that's variable, because every new customer adds tickets and pushes the bill up. The trick is tagging each line correctly. If you keep your books in Moneybird, label expenses as fixed or variable from day one, so your break-even and margin per sale fall straight out of the numbers instead of a spreadsheet guess.
Most early-stage advice (keep costs variable until demand is proven) comes straight from this distinction.