The maker's costing glossary
Fixed vs Variable Cost
Costs that stay put vs costs that scale with what you make.
Fixed costs don't change with how much you produce — studio rent, software subscriptions, insurance. Variable costs rise with each unit — materials, per-unit labor, packaging. The split is the backbone of break-even and contribution margin, and it tells you which costs to attack as you grow.
Why it matters
Understanding the split changes how you think about growth. Fixed costs get cheaper per unit the more you make (they're spread wider); variable costs don't. It's why volume helps a high-fixed-cost business and why cutting material waste helps a high-variable-cost one. Misread the split and you optimize the wrong thing.
How to calculate it
Sort each cost by a simple test: 'if I made one more unit this month, would this cost change?' If yes, it's variable; if no, it's fixed. Some costs are mixed — split them.
Example
Studio rent is fixed — it's the same whether you make 10 candles or 300. The wax and vessel in each candle are variable — they rise with every unit poured.
In practice
When a maker feels 'busier but not richer', it's often because they scaled variable costs (more materials, more hours) without spreading fixed costs any wider — the classic sign that price, not volume, is the problem.
Common mistakes
- Treating a mixed cost as purely fixed or purely variable.
- Assuming more volume always improves profit, ignoring variable cost per unit.
- Cutting fixed costs when the real leak is variable, or vice versa.
How CrafterBy handles it
CrafterBy captures your variable costs precisely per product; pairing them with your fixed overhead is what makes break-even and contribution margin meaningful.