What is Variable Costs?
A definition of Variable Costs
“Variable costs are expenses that fluctuate with a company’s level of production or sales volume. They vary depending on the amount of output produced.”

Business Glossary > What is Variable Costs?
Examples of Variable Costs in a Sentence:
Variable costs increase with higher production levels.
Managing variable costs is crucial for maintaining profitability.
The company reduced its variable costs to improve its profit margins.
Why is Variable Costs Important in Business?
Understanding variable costs helps businesses manage their finances more effectively. By tracking these costs, companies can make informed pricing, production, and budgeting decisions, which are crucial for maintaining profitability and competitive advantage.
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Associated Terms
Here are some associated business terms and synonyms for “Variable Costs”:
- Direct Costs
- Flexible Costs
- Operating Costs
Starbucks Variable Costs
Starbucks manages its variable costs by adjusting labor during different times of the day and optimizing supply chain efficiencies. By doing so, they can better control costs that fluctuate with customer demand.
Final Notes on Variable Costs
When businesses analyze their variable costs, they need to consider how these expenses directly impact their pricing and profitability strategies to ensure sustainability and growth.
This has been a definition of Variable Costs meaning.
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