Cost - GCSE Business Definition

A cost is the monetary value businesses incur to produce goods or provide services.

Costs can be fixed, like rent and salaries, which remain constant regardless of production levels. Alternatively, costs can be variable, such as raw materials and utility bills, fluctuating according to the volume of output.

Understanding costs is crucial for businesses as it affects pricing strategies, profit margins, and overall financial health. By effectively managing costs, businesses can maintain competitiveness and achieve their financial objectives.