Variable Expenses

Variable expenses are costs that change with how much you do or use. For a business they include raw materials, packaging, shipping and sales commissions, which rise with every extra sale; the business-accounting term is variable costs, where the full explanation is.

The phrase is especially common in personal finance. In a household budget, variable expenses are bills whose amount changes from month to month, such as groceries, fuel, electricity and eating out, while fixed costs such as rent, loan repayments and insurance stay the same. Budgeting advice usually starts with variable expenses because they are the easiest to cut quickly. In business analysis, the variable cost of one more unit is close to its marginal cost.