entrepreneurship vocab

Break-even point

The point at which a business’s total sales equal its total expenses; the business has not yet made a profit but has not incurred any losses

Capital expenditure

A one-time purchase a business makes (e.g.

Cost-based pricing

A pricing method in which the business adds a predetermined markup to the total cost of making the product

Depreciation

Loss of value

Economies of scale

Cost savings created by increased levels of production

Fixed costs

Business costs that are not affected by changes in sales volume; also known as fixed expenses

Fixed expenses

Operating costs that do not increase or decrease with changes in production; also known as fixed costs

Gross profit

A company’s revenue after subtracting the costs of the products it has sold

Mixed costs

Expenses that are fixed until the company reaches a certain level of production then become variable also called semi-variable costs or semi-fixed costs

Operating costs

The ongoing day-to-day expenses of running a business that are not directly related to production

Price-based costing

A pricing method in which the business determines how much customers will pay for a product then adjusts costs accordingly

Price markup

The difference between the total cost of a product and its selling price

Sales commission

An amount a salesperson earns per sale

Semi-fixed costs

Expenses that are fixed until the company reaches a certain level of production

Semi-variable costs

Expenses that are fixed until the company reaches a certain level of production then become variable; also called mixed costs or semi-fixed costs

Total cost

The sum of the overhead and direct costs required to make a product

Variable costs

Business costs that change according to changes in sales volume; also known as variable expenses

Variable expenses

Operating costs that fluctuate with changes in production; also known as variable costs