Variable Cost

Definitions

1. A cost that changes with output, usage, or sales volume, such as payment fees, shipping, usage-based infrastructure, or labor directly tied to delivery. Variable costs determine how unit economics behave as the business grows.

   In plain English: A cost that increases or decreases as volume changes.

   Example: "The new pricing worked because variable cost per transaction stayed low enough to preserve margin."

Related Terms

• Contribution Margin
• Cost of Goods Sold
• Cost of Revenue
• Fixed Cost
• Gross Margin
• Operating Leverage
• Operating Margin
• Profit Margin
• Supply Side