Fixed costs
Fixed costs are the operating costs that stay roughly the same regardless of how much you sell - rent, salaries, software, insurance. They are measured per period rather than per order, and an ecommerce operator uses them to work out how much contribution margin the store must generate to break even.
| Variable | What it covers |
|---|---|
| Rent | Office and warehouse leases - the same bill at 100 orders or 1,000. |
| Salaries | Team wages, including the owner's - the line most often left out. |
| Software & other overhead | Subscriptions, insurance, accounting and everything else billed per period, not per order. |
Worked example
Example numbers. The A$27.60 contribution per order comes from the A$120 order stepped down on The Math.
What is a good fixed cost base?
There is no benchmark number - a store running lean on a 3PL and a store carrying its own warehouse can both be healthy. What matters is coverage: how many orders of contribution margin it takes to pay the fixed bill, and how much cushion sits between that break-even volume and the volume you actually do. The trade-off is operating leverage: a lean base breaks even sooner, while a bigger base only pays if it buys margin or growth. Map your own base with the free Shopify P&L template, then divide it by your contribution per order.
Fixed costs vs related metrics
| Metric | What it measures | How it differs from fixed costs |
|---|---|---|
| Variable costs | Costs that scale with every order - COGS, shipping, fees, ad spend. | The mirror bucket. Variable costs move with volume; fixed costs move with time. |
| Contribution margin | Revenue minus variable costs. | The pool that pays the fixed bill - fixed costs are deliberately kept out of it. |
| Break-even point | Fixed costs ÷ contribution per order. | The number fixed costs directly set: every dollar of overhead raises the orders needed. |
| Net margin | Profit after all costs, fixed included. | Net margin is where fixed costs finally land; contribution margin is measured before them. |
Common mistakes
- Treating fixed as forever. Fixed costs are fixed against volume, not time - they step up in tiers as you outgrow a warehouse or add headcount.
- Forcing semi-variable costs into one bucket. A 3PL bill mixes per-order pick-pack (variable) with monthly minimums and storage (fixed). Split it.
- Spreading fixed costs across orders. A per-order overhead allocation changes every month with volume and corrupts unit economics - keep fixed costs out of the per-order view.
- Leaving out the owner's salary. A store that is only profitable because nobody pays you is not profitable.
- Letting subscriptions accrete. Fixed costs only fall when someone cuts them - review the software stack on a schedule.
Fixed costs FAQ
Related
Blufire S2 Unit Economics keeps fixed costs where they belong - out of the Profitability Cube's per-order view, and visible in the CM waterfall & bridge on the way to net. The Math teaches the full step-down free.
Updated July 2026