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Robert Dolan taught us that managing the gap between price and perceived value is marketings job in order to effectively manage that gap you need to understand the numbers behind each unit you sell imagine again that youre running a lemonade stand in order to build a sugar water empire youve got to know two things the fixed costs associated with your product and the variable costs associated with your product a fixed cost is any spending thats required independent of sales volume for your lemonade stand the fixed costs are small table a banner a cash box a pitcher and a spoon your fixed costs total $60 on your first day of business it doesnt matter if you sell one cup of lemonade or a hundred these costs will not change many people call this the overhead of course if you decide to open a second stand on your second day your fixed costs would change but lets not put the cart full lemons before the horse variable costs are the cost that increase as you produce and sell more units