What are some examples of upfront cost, how are they different from fixed costs? Don't you have to buy equipment, factory to rent etc anyway if you have a new business..so would this be upfront/investment costs or fixed costs?
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Hi there,
Fixed costs occur every year (i.e. equipment maintenace/repair, equipment depreciation, factory maintenace/repair, rent, etc.). Upfront investment costs occur in the first year and are what it costs to setup things (i.e. factory construction, bonds, legal fees, etc.)
If you're thinking about an investment decision/ROI, here's how the logic goes:
Your recuring annual revenues need to be greater than your recurring annual costs...and the difference between these two needs to aggregate to be larger than your upfront investment cost (to a high enough ROI). Finally, your recurring annual costs are broken down into fixed costs AND variable costs.
