Variable Cost Explained in 200 Words (& How to Calculate It)

There’s a frustrating truth that every business deals with early into its growth: More money, more problems.

It seems counterintuitive — if sales and revenue are up, isn’t that a good thing? How are bigger profits a potential problem?

Put simply, it all comes down to the fact that the more you sell, the more money you need to spend. This includes marketing and sales campaigns to reach more customers, the production costs of more goods, and the time and money required for new product development.

Known as variable cost, this sales/spend ratio is something every business owner should understand, but online advice listicles and action plans often assume readers have an intrinsic knowledge of this concept rather than providing a working definition.

在本文中，我们将清除可变成本混乱：您需要了解有关可变成本，如何计算它们以及为什么重要的知识。

Let’s examine each of these components in more detail.

Variable Cost Per Unit

每单位成本的可变成本是生产产品所需的人工，材料和其他资源的数量。bob体育苹果系统下载安装例如，如果您的公司以300美元的价格出售一bob全站app组厨刀，但每套需要200美元才能创建，测试，包装和市场，则您的每单位成本为200美元。

Number of Units Produced

The number of units produced is exactly what you might expect — it’s the total number of items produced by your company. So in our knife example above,if you’ve made and sold 100 knife sets your total number of units produced is 100, each of which carries a $200 variable cost and a $100 potential profit.

Variable costs earn the name because they can increase and decrease as you make more or less of your product. The more units you sell, the more money you’ll make, but some of this money will need to pay for the production of more units. So, you’ll need to producemore单位实际上赚钱。

And, because each unit requires a certain amount of resources, a higher number of units will raise the variable costs needed to produce them.

Variable costs aren’t a “problem,” though — they’re more of a necessary evil. They play a role in several bookkeeping tasks, and both your全部的variable cost andaveragevariable cost are calculated separately.

Total Variable Cost

Your total variable cost is the sum of all variable costs associated with each individual product you’ve developed. Calculate total variable cost by multiplying the cost to make one unit of your product by the number of products you’ve developed.

For example, if it costs $60 to make one unit of your product and you’ve made 20 units, your total variable cost is $60 x 20, or $1,200.

平均可变成本

Your average variable cost uses your total variable cost to determine how much, on average, it costs to produce one unit of your product. You can calculate it with the formula below.

总可变成本与平均可变成本

If the average variable cost of one unit is found using your total variable cost, don’t you already know how much one unit of your product costs to develop? Can’t you work backward, and simply divide your total variable cost by the number of units you have? Not necessarily.

While total variable cost shows how much you’re paying to develop every unit of your product, you might also have to account for products that have different variable costs per unit. That’s where average variable cost comes in.

For example, if you have 10 units of Product A at a variable cost of $60/unit, and 15 units of Product B at a variable cost of $30/unit, you have two different variable costs — $60 and $30. Your average variable cost crunches these two variable costs down to one manageable figure.

In the above example, you can find your average variable cost by adding the total variable cost of Product A ($60 x 10 units, or $600) and the total variable cost of Product B ($30 x 15 units, or $450), then dividing this sum by the total number of units produced (10 + 15, or 25).

Your average variable cost is ($600 + $450) ÷ 25, or$42 per unit.

Variable vs. Fixed Cost

The opposite of variable cost? Fixed cost.Fixed costsare costs that don’t change in response to the number of products you’re producing.

Some common fixed costs include renting or leasing a building, utility bills, website hosting, business loan repayments, and property taxes.

值得注意？这些费用不是static— meaning, your rent may increase year over year. Instead, they remain fixed only in reference to product production.

To calculate the average fixed cost, use this formula:

变量和固定成本对于完全了解生产商品的成本以及每次销售后仍保留多少利润至关重要。

To calculate variable cost ratio, use this formula:

Let’s put it into practice. If you’re selling an item for $200 (Net Sales) but it costs $20 to produce (Variable Costs), you divide $20 by $200 to get 0.1. Multiply by 100 and your variable cost ratio is 10%. This means that for every sale of an item you’re getting a 90% return with 10% going toward variable costs.

同时，将变量和固定成本结合在一起可以帮助您计算盈亏平衡点— the point at which producing and selling goods is zeroed out by the combination of variable and fixed costs.

再次考虑上面的示例。如果您的200件商品的可变成本为20美元，而您的固定成本帐户为100美元，那么您的总成本现在占该商品销售价值的60％，而您的总费用为40％。

Put simply? The higher your total cost ratio, the lower your potential profit. If this number becomes negative, you’ve passed the break-even point and will start losing money on every sale.

So, what’s considered a variable cost to the business?

Some of the most common variable costs include physical materials, production equipment, sales commissions, staff wages, credit card fees, online payment partners, and packaging/shipping costs.

Let’s examine each in more detail.

Physical Materials

These can include parts, cloth, and even food ingredients required to make your final product.

生产设备

If you automate certain parts of your product’s development, you might need to invest in more automation equipment or software as your product line gets bigger.

销售佣金

The more products your company sells, the more you might pay in commission to your salespeople as they win customers.

Staff Wages

The more products you create, the more employees you might need, which means a bigger payroll, too.

Credit Card Fees

Businesses that receive credit card payments from their customers will incur higher transaction fees as they deliver more services.

Online Payment Partners

诸如PayPal之类的应用程序通常每笔交易向业务收费，因此客户可以通过应用程序查看购买。您收到的订单越多，您向应用程序付款的次数就越多。

Packaging and Shipping Costs

You might pay to package and ship your product by the unit, and therefore more or fewer shipped units will cause these costs to vary.

Expect the Unexpected

While variable costs, total variable costs, average variable costs, and the variable cost ratio often seem complicated on the surface, these terms are simply ways to represent the changing nature of costs to produce new items as your business grows.

通过了解这些成本的性质以及它们如何影响您当前和预计的收入，可以更好地为不断发展的市场力量做好准备，并降低可变成本对底线的影响。