step cost
Also called: step-fixed cost, step costs
A cost that stays flat over a range of volume and then jumps to a new level, such as one more support coordinator for every few hundred learners.
A step cost (or step-fixed cost) stays flat over a range of volume and then jumps by a whole chunk when a capacity threshold is passed. Typical examples: one support person per so many customers, a server or software tier with a usage cap, a second shift, a bigger office.
Between the steps it behaves like a fixed cost; across a wide range of volume it behaves like a lumpy variable cost. That double nature is what makes it tricky. Near a threshold, one extra customer can cost a whole salary. Each step also raises total fixed costs, so the break-even point moves up exactly when growth seems to be going well.
To handle step costs, write down the capacity of each step ("one coordinator per started 400 active learners") and check how close you are to the next threshold before a campaign or a price change. If contracts allow it, steps can also go down: seasonal staff, monthly cloud tiers. A cost that can only step up deserves more caution than one that can step back.
Example
Klasna adds one support coordinator, 38,000 UAH a month, for every started 400 active learners, on seasonal contracts.
From March to April only 60 learners went past the 1,200 threshold, yet costs rose by a full 38,000 a month. With 1,650 learners Klasna would need five coordinators (190,000 UAH), because the fifth block of 400 has started.
Common mistakes
- Planning growth with today's fixed costs. A forecast that doubles customers but keeps support flat is missing steps.
- Averaging the step per unit. 38,000 ÷ 400 = 95 UAH per learner hides the jump and the threshold where it happens.
- Forgetting the step down. If the season ends and capacity stays, summer carries a cost built for spring.
- Using an old break-even point after a step. Each step raises fixed costs; recompute the line.
Learn it in the course
- Cost behavior: fixed, variable and step costs · Cost behavior on a real year of costs: which costs move with lessons, which don't, and which jump at a threshold.
- Break-even point in units and margin of safety · Break-even point in units: how many lessons a month cover the fixed costs, and how far sales can fall before a loss.
- Scenarios and sensitivity · Which assumption matters most, and a plan for the weak case.