Fixed costs in a [[cost structure]] refer to expenses that remain constant regardless of the level of production or sales volume. These costs do not fluctuate with the business's operational activities and are incurred even if no goods or services are produced. Examples of fixed costs include rent, salaries of permanent staff, insurance, and depreciation on equipment. Fixed costs are crucial for budgeting and financial planning as they represent the baseline expenses a company must cover to stay operational. In contrast, [[variable costs]] change directly with the level of production or sales volume; they increase as production rises and decrease when production falls. Together, fixed and variable costs form the total cost structure of a business, influencing pricing strategies and profitability analysis.