---
title: Variable Cost
description: A variable cost is an expense that fluctuates in proportion to a firm’s level of production.
---

[Realized 1031 Glossary of Terms ](https://www.realized1031.com/glossary)

# [Variable Cost](https://www.realized1031.com/glossary/variable-cost)

 Written by [The Realized Team](https://www.realized1031.com/glossary/author/the-realized-team) | Jun 27, 2022 3:15:00 PM

A variable cost is an expense that fluctuates in proportion to a firm’s level of production. An example of a variable cost is a utility expense, which fluctuates on a monthly or annual basis depending on the amount of electricity and/or water a firm needs in the production of its goods or services.

Variable costs differ from fixed costs, which do not change based on the production of a good or service. An example of a fixed cost is rent, which is a contractual amount to be paid on a regular schedule over a defined period of time.

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