AJ walks through how to calculate total fixed cost by adding up expenses a business pays every month no matter what. The example adds rent, insurance, salaries, and equipment lease to show the math.
Questions this video answers
$10,000
$2,000
$100,000
$8,000
$120,000
Chapters
Hi, I'm AJ from HubSpot, and today I'm going to show you how to calculate total fixed costs for your business. If you find this video helpful, don't forget to like it and subscribe to our channel and post any questions or tips you have about calculating total fixed costs in the comments below. Understanding total fixed cost is a necessary first step in opening and operating a business. Put simply, the total fixed cost is the amount of money a business needs to spend whether or not it makes a single sale. Typically, expenses like rent or mortgage salaries and equipment rentals fall into this category. Total fixed cost does not include variable costs such as electricity cost per unit sold and hourly wages, as these can vary by how many hours you operate and how many units you sell during a given month. For example, let's say your business spends $10,000 a month on rent, your insurance is another $2,000 a month, and your salaried employee wages come out to $100,000 a month. Month. Lastly, your equipment lease for machinery comes out to $8,000 a month. Adding these together results in a total fixed cost of $120,000. It's as simple as that. If total fixed cost still doesn't make complete sense to you, read HubSpot's full blog post on total fixed cost, linked below in the description. Thanks for watching and if you enjoyed this video, please be sure to like it and subscribe to our YouTube channel.
