What is Fixed costs?
Costs that stay the same whatever you sell: wages, upkeep, insurance, property tax.
Fixed costs are paid even when no customers come. They only change when the business itself changes — a new hire, a bigger building.
Formula
Total cost = Fixed costs + (Variable cost per unit × Units sold)
Example
A hotel paying $150 in wages, $78 in upkeep and $47 in property tax has $275 of fixed costs a day.
Why it matters
High fixed costs mean big profits when busy and big losses when quiet (operating leverage).
Free tool
Hotel Break-Even Calculator →
Lesson
Fixed vs Variable Costs: Why a Full Hotel Can Still Lose Money →
🏨 See it in a hotel game
Payroll, room upkeep, facility upkeep, insurance and property tax in the Finance tab are all fixed costs.
Play free — no download