1. What is Total Fixed Cost?

Total Fixed Cost (TFC) represents the sum of all business expenses that remain constant regardless of production or sales volume. These costs must be paid even when production is zero.

2. How Does the Calculator Work?

The calculator uses the simple formula:

Where:

• Rent/Mortgage — Fixed property costs
• Utilities — Basic service costs (electricity, water, etc.)
• Salaries — Fixed payroll expenses
• Insurance — Regular premium payments
• Other Fixed Costs — Any additional fixed expenses

Explanation: The calculator sums all these fixed expenses to determine your total fixed costs in British pounds (£).

3. Importance of Fixed Cost Calculation

Details: Knowing your fixed costs is essential for pricing strategies, break-even analysis, and financial planning. Fixed costs help determine the minimum revenue needed to cover expenses.

4. Using the Calculator

Tips: Enter all fixed monthly expenses in GBP (£). Include all recurring costs that don't vary with production volume. For annual costs, divide by 12 to get monthly equivalents.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between fixed and variable costs?
A: Fixed costs remain constant (rent, salaries), while variable costs change with production volume (materials, commissions).

Q2: How often should I calculate fixed costs?
A: Review fixed costs quarterly or whenever you have significant changes (new lease, salary adjustments).

Q3: Should I include loan payments?
A: Yes, include the principal and interest portions of any fixed loan repayments.

Q4: Are taxes considered fixed costs?
A: Fixed business taxes (like property tax) are fixed costs, while income taxes vary with profit.

Q5: How can I reduce fixed costs?
A: Consider renegotiating leases, outsourcing non-core functions, or switching to variable cost structures where possible.