{"id":1559,"date":"2026-02-24T21:47:31","date_gmt":"2026-02-25T03:47:31","guid":{"rendered":"https:\/\/www.zoomshift.com\/blog\/?p=1559"},"modified":"2026-03-26T08:39:50","modified_gmt":"2026-03-26T13:39:50","slug":"variable-cost","status":"publish","type":"post","link":"https:\/\/www.zoomshift.com\/blog\/variable-cost\/","title":{"rendered":"Variable Cost"},"content":{"rendered":"

<\/span>What Is a Variable Cost?<\/span><\/h2>\n

A variable cost is a cost incurred by a business and is associated with the number of services or goods it produces.<\/p>\n

When a business is producing more goods, the variable costs will increase \u2013 and as you might imagine, if the volume decreases, so does the variable cost.<\/p>\n

Variable cost is often mentioned in the same breath as fixed cost. Fixed cost<\/a>, however, remains the same no matter how many goods a business is producing.<\/p>\n

 <\/p>\n

<\/span>What Is the Variable Cost Formula, and How Is Variable Cost Calculated?<\/span><\/h2>\n

There are two main variable cost formulas: total variable cost and average variable cost.<\/p>\n

You calculate total variable cost by taking the cost to make one unit of your product, and multiplying that by the number of units produced.<\/p>\n

So if it costs $50 to make one unit, and you’ve made 40 units, your total variable cost will be $50 x 40 = $2000.<\/p>\n

The formula for average variable cost requires you to have already worked out your total variable cost. The formula looks like this:<\/p>\n

Average variable cost = total variable cost of product 1 + total variable cost of product 2 [and so on] \/ total number of units made<\/strong><\/p>\n

 <\/p>\n

<\/span>Variable Cost Examples<\/span><\/h2>\n

There are many examples of where variable costs are used \u2013 here are some of the most common:<\/p>\n

    \n
  1. Billable labor – the more products you make, the more staff you need.<\/li>\n
  2. Commissions – if you have a sales team working for you, then the more your company sells, the more the commission is going to be.<\/li>\n
  3. Direct materials – this is anything that you’ve used to build your products. The more you make, the more you need.<\/li>\n<\/ol>\n

    ******<\/p>\n

    See our full list of over 50 Small Business Terms here<\/a>.\u00a0<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

    What Is a Variable Cost? A variable cost is a cost incurred by a business and is associated with the number of services or goods it produces. When a business is producing more goods, the variable costs will increase \u2013 and as you might imagine, if the volume decreases, so does the variable cost. Variable […]<\/p>\n","protected":false},"author":17,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false},"categories":[11],"tags":[],"yoast_head":"\nUnderstanding Variable Costs: Essentials for Business Managemen<\/title>\n<meta name=\"description\" content=\"The concept of variable costs, which are incurred by businesses and fluctuate in relation to the quantity of goods or services produced.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.zoomshift.com\/blog\/variable-cost\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Understanding Variable Costs: Essentials for Business Managemen\" \/>\n<meta property=\"og:description\" content=\"The concept of variable costs, which are incurred by businesses and fluctuate in relation to the quantity of goods or services produced.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.zoomshift.com\/blog\/variable-cost\/\" \/>\n<meta property=\"og:site_name\" content=\"Zoomshift\" \/>\n<meta property=\"article:published_time\" content=\"2026-02-25T03:47:31+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2026-03-26T13:39:50+00:00\" \/>\n<meta name=\"author\" content=\"ZoomShift\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"ZoomShift\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.zoomshift.com\/blog\/variable-cost\/\",\"url\":\"https:\/\/www.zoomshift.com\/blog\/variable-cost\/\",\"name\":\"Understanding Variable Costs: Essentials for Business Managemen\",\"isPartOf\":{\"@id\":\"https:\/\/www.zoomshift.com\/blog\/#website\"},\"datePublished\":\"2026-02-25T03:47:31+00:00\",\"dateModified\":\"2026-03-26T13:39:50+00:00\",\"author\":{\"@id\":\"https:\/\/www.zoomshift.com\/blog\/#\/schema\/person\/9ba35c556ffdf9d8dab06992b17a4b0d\"},\"description\":\"The concept of variable costs, which are incurred by businesses and fluctuate in relation to the quantity of goods or services produced.\",\"breadcrumb\":{\"@id\":\"https:\/\/www.zoomshift.com\/blog\/variable-cost\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.zoomshift.com\/blog\/variable-cost\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/www.zoomshift.com\/blog\/variable-cost\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/www.zoomshift.com\/blog\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Variable Cost\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.zoomshift.com\/blog\/#website\",\"url\":\"https:\/\/www.zoomshift.com\/blog\/\",\"name\":\"Zoomshift\",\"description\":\"SMB Management Blog\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/www.zoomshift.com\/blog\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/www.zoomshift.com\/blog\/#\/schema\/person\/9ba35c556ffdf9d8dab06992b17a4b0d\",\"name\":\"ZoomShift\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.zoomshift.com\/blog\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/05af010fb3485fa8095793cfff89a5e6?s=96&d=mm&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/05af010fb3485fa8095793cfff89a5e6?s=96&d=mm&r=g\",\"caption\":\"ZoomShift\"},\"description\":\"The leading scheduling software designed for hourly employees. 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