Fixed costs

Definition

Their share determines how sensitive a business is to swings in turnover. A high fixed-cost share means strong leverage upwards and downwards — the reason businesses with expensive infrastructure need utilisation rather than margin.

The classification is a question of time horizon. Over one year salaries are fixed; over three years they are not. Whoever calculates with the distinction should state the horizon alongside it.

What the software must be able to do

In the accounts the distinction does not appear by itself — it is an assignment. Check whether accounts or cost types can be grouped so that the fixed-cost block is visible at a glance.

Checked Aug 2026

More terms under Bookkeeping and retention: Accrual principle Accrued liabilities Annual accounts Association accounting Balance sheet Balance sheet total Book value Break-even point Business assets Business expenses Cash book Cash flow statement Cash receipts Contribution margin Cost centre Current assets Debit and credit Depreciation Double-entry bookkeeping Duty to keep accounts EBIT EBITDA Equity Equity ratio Financial year Fixed assets Foreign currency General ledger Gross profit Hidden reserves Income statement Inventory count Journal Journal entry Liabilities Liquidity Loss carry-forward Membership dues Net profit Opening balance sheet Overheads Pass-through item Prepaid expenses Provision Record-keeping ordinance Reserves Retained profit Simple accounts Swiss SME chart of accounts Tamper resistance Turnover Value adjustment Variable costs Volunteer-run structure Voucher Year-end closing modules