Fixed vs Variable Cost Analyzer
Classifies all business costs as fixed or variable, computes the cost structure ratio, and calculates operating leverage. Shows how revenue changes affect profitability at different volume levels.
Operations - Fixed Vs Variable Cost Analyzer.xlsx
Excel (.xlsx) — No macros — Works in Excel, Google Sheets, LibreOffice
What This Spreadsheet Solves
- No clear picture of the fixed-to-variable cost ratio
- Difficulty predicting how profit changes when revenue fluctuates
- Cost reduction efforts unfocused because cost structure is not mapped
- Operating leverage misunderstood, leading to poor scaling decisions
- Budget models that do not distinguish costs that scale with volume from those that do not
Who This Is For
- Operations managers analyzing cost structure
- CFOs modeling profitability at different revenue levels
- Business analysts building financial models
- Startup founders understanding their operating leverage
Inputs
- textCost item description
- $Monthly cost amount
- textCost type (fixed or variable)
- $Monthly revenue
- %Expected revenue growth rate
Outputs
- Total fixed costs per month
- Total variable costs per month
- Fixed-to-variable cost ratio
- Operating leverage ratio
- Profit sensitivity to 10% revenue change
- Break-even revenue point
How Calculations Work
Each cost is tagged as fixed or variable. Fixed costs remain constant regardless of revenue. Variable costs are expressed as a percentage of revenue. The analyzer sums each category, computes the ratio, and derives operating leverage (contribution margin divided by operating income). A sensitivity table shows profit at revenue levels from -30% to +30% of current to illustrate how operating leverage amplifies gains and losses.
Example Use Case
Scenario: A SaaS company has $80,000/month fixed costs (rent, salaries, software) and $35,000/month variable costs (hosting, support, commissions) on $180,000 revenue.
Result: Fixed-to-variable ratio: 70:30. Operating leverage: 2.2x. A 10% revenue increase ($18,000) produces a 22% profit increase ($14,300). Break-even revenue: $123,077.
What You Get — 5 Sheets
Technical Details
Frequently Asked Questions
How do I classify semi-variable costs?
Split them into their fixed and variable components. A phone bill with a $50 base plus $0.10/minute has a $50 fixed component and a variable component based on usage.
What is operating leverage?
The ratio of contribution margin to operating income. Higher leverage means profits change faster than revenue - amplifying both gains and losses.
Is high or low operating leverage better?
Neither inherently. High leverage benefits companies with growing revenue (profits grow faster). Low leverage protects companies with volatile revenue (profits fall slower).
Should depreciation be included?
Yes, as a fixed cost. Depreciation does not change with volume and should be included for an accurate cost structure picture.
How often should I update this analysis?
Quarterly, or whenever there is a significant cost structure change (new hire, new tool, lease renewal, pricing change).
Download Fixed vs Variable Cost Analyzer
Ready to use immediately. Enter your data in the INPUT sheet, see results in OUTPUT.