Fixed costs are expenses that stay the same no matter how much or how little a business produces or sells. Whether you make 10 units or 10,000 units, these costs do not change.
Common examples include rent, insurance premiums, loan payments, and salaried employee wages. A bakery pays the same $3,000/month rent whether it sells 100 or 1,000 loaves of bread.
Understanding fixed costs is vital for break-even analysis. You need to generate enough revenue to cover fixed costs first — after that, each additional sale contributes more directly to profit.