The process of executing a business always involves the process of managing and tracking the expenses. Additionally, we can successfully work the budgeting process with a good understanding of the costs and their management. Hence, advertising falls under two categories: Fixed and Variable. However, in the budgeting work, most of the individuals get confused about “Is advertising a Fixed Cost?” Nevertheless, worry not as we have answered all the questions related to advertising cost, whether advertising is fixed or variable, and everything related to it. Scroll to read more about it!
What are Fixed and Variable Expenses?
“Are advertising costs fixed or variable” is one of the most asked questions by marketing professionals. However, the costs are classified into two categories: fixed and variable. Management budget fixed the costs such as advertising and kept controls over the expense. A company or organisation knows how much it can spend on advertising and hence has a fixed cost.
On the contrary, variable expenses or variable cost always depends on several factors including the supply and demand of the company goods, the cost of raw materials, transportation costs, and commissions paid to salespeople and distributors. As a result, the higher sales the company experiences, the higher variable costs will go.
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Is Advertising a Fixed cost?
Although the advertising process can have an estimated cost, it cannot have a fixed cost. Hence people who are confused about “are advertising fixed or variable”, the answer is no. Moreover, there are many factors that impact the cost of advertising. They are,
Discretionary Spending
In advertising, discretionary is a fixed-cost non-essential cost or spending of a company. However, a company can still run without discretionary spending and the business and still work.
Seasonal Variations
Even though a company has a fixed cost for advertising, it can change owing to seasonal variations. Meanwhile, seasonal variations mean changes in costs owing to the weather, the market, the demand, and several other factors. For instance, in summer, the sale of air conditioners and fans rapidly increases whereas, in winter, the sale of quilts and electric heaters increases. Hence, marketers should be always aware of seasonal variations.
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Conclusion
While there are numerous factors that can affect a business’s fixed cost, it is important to note that having a fixed cost is not necessarily a requirement for running a successful business. However, it is essential to be mindful of your finances when it comes to digital marketing, as it can quickly become expensive if not managed properly. Therefore, when it comes to advertising, whether it’s a fixed or variable cost, it is crucial to make wise decisions in order to attract more customers and promote growth for your business.
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