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as an ultra simplified example well assume Joe has a web design business that sells simple websites at exactly a hundred bucks each and currently has three employees who are paid a fixed monthly salary to run his business there are costs involved with the two main dimensions being a fixed costs or costs that stay the same no matter how much business you do so whether he had zero clients last month or was super busy the fixed cost stayed the same in his case these costs are one the rent he pays for his office two the salaries he pays his employees since they are fixed three the monthly license fees he pays for the various software his company uses the variable costs or costs that fluctuate in his case one utilities such as the electricity bill which go down if there are no orders and nobody has to come to the office or up as people stay at the office more consuming electricity when working to overtime pay if he has lots of orders and needs his employees to work more than they agree to