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Economics
Variable Cost
Costs that go up or down depending on how much you sell — materials, shipping, payment processing fees.
Variable costs are good because they only appear when you make money. The lower your variable costs relative to selling price, the higher your gross margin and the easier it is to scale.
It's the cost of every extra pizza you bake once the oven is already hot.
Real world: In dropshipping, the variable cost per order is the supplier price + shipping + transaction fee. If you sell 10 orders instead of 1, these costs go up 10 times.
💡 Low variable costs + high sales volume = the dream formula for online businesses.