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Variable Costs

Costs that rise and fall with how much you produce or sell, like materials, shipping, payment processing, and usage-based hosting.

Why it matters

Variable costs determine your contribution margin, how much each sale actually helps. Understanding which costs are variable versus fixed is essential to pricing and to knowing when scale improves your economics.

For example

For a D2C brand, the materials, packaging, and shipping of 400 rupees per order are variable costs that rise with every sale.

Go deeper

Related terms

Fixed Costs Contribution Margin Cost of Goods Sold

Also in Starting Up

See how founders actually handle this on Money, pricing and metrics, part of the Starting Up hub.

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