Can fixed costs ever change over time, and how should businesses adapt?

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The fixed costs are relatively fixed in the short run but the changes may occur in the long run because of factors such as inflation, renegotiation of contracts among others. For instance, the rental agreements have provision of annual adjustments while insurance costs may be subjected to market forces.

Fixed cost should always be monitored and checked periodically so that they do not become too overwhelming for business. Adjusting to change may mean re-negotiating contracts, finding a new provider, or a decision to invest into technology tools that can simplify tasks and lessen the use of expensive assets.

Understanding how to control fixed costs before they skyrocket will also contribute towards protecting the bottom line of businesses. Furthermore, developing an insurance fund or a cushion in case of outlined fixed costs can give more discretion to adapt to changes that occur concerning the fixed expenses without having to shut down a business examples of fixed costs