Upfront/investment costs and fixed costs

Question

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?

Answer 1

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.

Answer 2

Hello, Interesting question! I would structure it like this: Pathology Market in city X: - Current Demand for this... (read entire answer)

Hello, Interesting question! I would structure it like this: Pathology Market in city X: - Current Demand for this services - Expected growth - How do customers in this city c... (read entire answer)