Fixed costs vs variable costs for small shops: the difference, with worked examples.

A fixed cost is a scheduled payment your shop owes whether it sold anything that day or not — rent, salaries, insurance, software, accountant fees. A variable cost scales with sales or operations — cost of goods sold, card transaction fees, packaging, per-order shipping. The split sounds simple and most owners get the headline right. Where it falls apart is the edge cases (is part-time staff fixed or variable?), the spread (a €1,800 annual accountant invoice is €150/month, every month — not a shock that lands in March), and the allocation (rent is a monthly bill but it has to be earned back every single trading day). nouz handles all three: enter each fixed cost once with a start date, mark variable costs as they happen, and the daily P&L slices everything into one honest number that tells you whether today paid for itself.

TL;DR

The definition that actually works

Textbooks define fixed costs as "costs that do not change with output." That is technically correct and operationally useless. A small shop owner does not think in terms of output curves. They think in terms of bills. So here is the working definition that holds up at 9pm on a Wednesday when you are categorising last week's expenses:

• Fixed cost: a scheduled or recurring payment that arrives on a known cadence (monthly, quarterly, annually) regardless of how busy the shop was. Rent is fixed. The €280/year insurance premium is fixed (it just doesn't feel like it because it lands once). The salaried barista-manager you pay €2,400/month is fixed.
• Variable cost: a payment that only exists because a sale or operation happened. The milk you bought because last week you sold a lot of lattes is variable. The 1.5% card fee on the €1,400 of card sales today is variable. The €0.18 takeaway cup that went out with a flat white is variable.
• Mixed cost: a payment with both a fixed base and a variable component. A part-time barista on guaranteed 12 hours plus extra weekend hours is mixed — 12 hours fixed, the rest variable. Electricity has a fixed standing charge plus a usage rate. Most accounting systems force you to pick one; nouz lets you split the line.

Notice what this definition is not doing. It is not asking whether the cost is large or small. It is not asking whether the cost is "essential" or "optional." It is not asking whether the cost is tax-deductible. Those are different questions for different conversations. The fixed-vs-variable question has one purpose: it tells you what your daily floor is — the amount you owe before the first cup of coffee gets sold.

Why owners get confused

The categorisation is not hard in the abstract. It gets hard at the moment of entry because shop costs do not arrive labelled. Three patterns trip almost every owner up.

The salary debate. Owners argue endlessly about whether staff costs are fixed or variable. The answer: it depends on the contract, not on how you feel about it. A salaried employee on a guaranteed monthly amount is fixed — you pay them in a slow week and you pay them in a busy week. An hourly employee called in only when the schedule demands it is variable — you only pay them because operations happened. A contract that guarantees 20 hours and allows up to 38 is mixed: 20 hours fixed, the top 18 variable. Stop arguing the philosophy and read the contract.

The annual-invoice illusion. The accountant's €1,800 invoice lands in February. Owners log it in February, that month looks awful, the other eleven months look great, and the average is wrong on both sides. Same for liability insurance (€420 once a year), the EHO inspection, the lawyer-on-retainer (€300/year), the domain renewal. Each one is a steady cost wearing an annual disguise. Divide by 12 and treat as monthly fixed. nouz does this automatically if you enter the amount as monthly; otherwise do the division yourself before entering.

The "I only pay it sometimes" trap. Equipment repairs, occasional cleaning services, one-off marketing campaigns, the seasonal extra freezer rental. Owners file these as "variable" because they are irregular. Wrong axis: irregularity does not make a cost variable. Variable means scales with sales. A €600 oven repair was not caused by a busy day; it was caused by an oven wearing out, which would have happened regardless. That is a fixed cost that smooths out over the year (or a depreciation line if the repair effectively extends the asset's life).

The clean test: closed for a week

Rent: yes, still pay. Fixed. Salaried manager: yes, still pay (you cannot stop paying salaried staff because you fancied a quiet week). Fixed. Insurance, POS subscription, software, accountant fees, internet, depreciation on the espresso machine: all still owed. Fixed.

Milk delivery: no, you would cancel. Variable. Takeaway cups: no, you would stop ordering. Variable. Card processor fees: zero because there were no card sales. Variable. Casual weekend staff: not called in. Variable. Cleaning supplies, repairs from wear, packaging: all stop. Variable.

The grey zone is where it gets interesting. Electricity: the freezer still runs, the lights are off, the espresso machine is in standby. You pay less, not nothing. Mixed. Part-time barista on a 12-hour guarantee: you owe the 12 hours, you do not owe the extras. Mixed. Web hosting: still on. Fixed. The decision rule for mixed costs: estimate the base (what you would owe in a fully closed week) and call that fixed; treat the rest as variable.

Fixed cost examples by sector

The exact list varies, but the categories repeat. Here is what a typical small shop in each sector carries as fixed cost lines. Numbers are illustrative monthly figures for a single-location operator in a mid-sized European city — yours will differ, but the order of magnitude is usually right.

Most owners can list 60% of their fixed costs from memory. The other 40% live in annual invoices, depreciation, and the silent SaaS stack. A 20-minute audit of three months of bank statements usually surfaces the missing lines. The single biggest miss across every sector is depreciation — equipment is wearing out, the replacement bill is coming, and nothing in the bank statement reminds you of it monthly. Pick a useful-life estimate per asset (5 years for an espresso machine, 7 for retail fit-out, 3 for laptops), divide purchase price by life-in-months, and add it as a fixed cost line.

Variable cost examples by sector

Variable costs are easier to miss in aggregate because they arrive in small amounts spread across many vendors. Individually each is €15 here, €40 there. Collectively they often add to 5–8% of net revenue — the same order of magnitude as a healthy operating margin.

The fix for invisible variable costs is mechanical: track them daily, the same evening they happen, categorised. After two months a pattern emerges — usually one or two categories quietly eating margin (takeaway cups when the supplier raised prices 22%, ad cost-per-click drifting up on the ecom side). You cannot negotiate or substitute what you cannot see.

Mixed costs: the edge cases that catch everyone

Pure-fixed and pure-variable are the easy ones. The mixed costs are where owners argue with their accountant and their accountant argues back. Six common examples, with the practical handling.

You do not need to be surgical about this. A 90% fixed / 10% variable cost can be filed entirely under fixed without your daily P&L losing meaningful accuracy. The point of the split is honest break-even — not bookkeeping perfection. Pick the dominant character of the cost and move on.

Why daily allocation matters (and why ÷ 30.4375)

Most accounting tools show fixed costs as monthly totals. That is fine for the tax return. It is terrible for running the shop, because the shop runs daily — and a monthly mindset means rent only hurts on the 1st and depreciation never hurts at all. Owners then over-celebrate slow Tuesdays that did €600 of revenue ("that's fine for a Tuesday") when actually that Tuesday lost €200 once the daily fixed slice is applied.

nouz takes every fixed cost and divides it into a daily amount using ÷ 30.4375 — the average number of days per month across a year (365.25 ÷ 12). This matters because the calendar is uneven: February has 28 (or 29) days, March has 31, April has 30. Dividing by the actual days-in-month would mean February rent slices at €107/day while March rent slices at €97/day for exactly the same lease. The shop did not change; only the calendar did. Using 30.4375 keeps the daily floor consistent across months, which is what you want for honest comparisons.

See exactly how this lands on your shop's numbers with the small-business break-even calculator — plug in monthly fixed costs, gross margin, and average ticket; it returns the daily revenue floor.

Worked example: a Vienna café's monthly P&L

A 22-cover specialty café in Vienna, one location, one salaried manager plus two casual baristas. Monthly figures, all in euros. Net revenue (after VAT and card fees) sits at around €18,400 across roughly 26 trading days.

Two things to notice. First: the daily fixed floor is €307.18. Every trading day owes that amount in fixed allocation before contributing anything to EBIT. A Tuesday that does €450 of net revenue with €210 of variable costs nets €240 of contribution margin — €67 short of fixed slice. That Tuesday lost money even though the till felt steady. Second: total EBIT of €400/month on €18,400 of net revenue is a 2.2% margin — barely profitable, and one supplier price hike or one lost weekend away from breakeven. This is the conversation the monthly P&L surfaces; the daily P&L surfaces it 30 times sooner.

For a deeper walk-through of why busy days do not always pay, see I make sales but no profit: the 7 hidden leaks. For the EBIT formula itself, EBIT explained. For how the daily number lands in your inbox or dashboard each evening, same-day profit and loss.

The active-window rule: a March trial should not bleed into April

Fixed costs do not run forever. The €40/month accounting plugin you cancelled in March should stop slicing into April's daily floor. The new €60/month booking tool you signed up for on the 14th should start slicing from the 14th, not from the 1st. The €180/month rent reduction your landlord agreed to from June 1 should reflect from June 1 — past months should stay exactly as they were.

nouz handles this with a start_date and optional end_date on every fixed cost. A cost is active on a given day only if start_date <= day AND (end_date IS NULL OR end_date >= day). That gives you four useful behaviours:

• New cost from a date: rent goes up €200/month from August 1 — close the old line at July 31, open a new one at August 1. Days before August 1 keep using the old amount.
• Trial that ended: a one-month software trial ran March 1 – March 31 — set end_date to March 31. April's daily floor is automatically lower.
• Seasonal cost: the extra winter heating contract runs October – March only — open one entry per active window, or use two entries with the relevant dates.
• Retroactive correction: spotted an old subscription you should have logged from January — backdate the start_date and the daily slices recompute from then forward; nothing else changes.

The non-negotiable: editing or deleting a fixed cost never retroactively changes days that were already saved. If you increase rent today and apply it from today forward, last month's P&L stays exactly as it was. This is what makes the daily history trustworthy — you can look back at any past day in nouz and the number will be the same as it was the evening that day closed.

How to set this up — in nouz or in any system

Whether you use nouz or a spreadsheet, the setup is the same six moves. Block 30 minutes, open three months of bank statements, and walk through:

1. List every fixed cost line. Bank statements, annual invoices, depreciation estimates, owner salary at replacement cost. Each one is a name + monthly amount + start date. Aim for 12-25 lines for a typical small shop.
2. Convert annual to monthly. Anything billed yearly: divide by 12 and enter as monthly. Do not let annual cadence hide steady costs.
3. Split mixed costs. Part-time guaranteed hours, salary plus commission, utilities. Estimate the base — that is the fixed portion. The rest will land as variable as it happens.
4. Set start dates correctly. If you are entering history, use the actual start date of each cost. If you are only running forward from today, today is fine — past P&L will not include them, which is honest.
5. Add the daily-variable habit. Pick a 90-second close-out routine: every evening, log today's revenue split (cash/card), today's COGS, today's small variable spends. Two months in, you will see the pattern.
6. Read the daily number. The daily EBIT is the only number that matters at the end of a trading day. Above zero = the day paid. Below zero = the day cost money, regardless of how busy it felt.

In nouz the entry takes about 20 seconds per fixed cost line, and the daily slice appears automatically in every day's P&L from the start_date forward. The help-center article on adding a fixed cost walks the form field by field. The free daily profit calculator runs the same math without signup if you want to sanity-check a single day before committing. Or start from the nouz home page for the full daily flow.

If you want the full anatomy of the day-by-day P&L — what each line is, where it comes from, why the order matters — read how to read a P&L statement next. For the case that fixed costs should be visible by 9pm tonight, not three weeks later, same-day profit and loss. The cross-vertical synthesis lives in the daily P&L pillar guide.

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