Variable Costs

Operating leverage measures how sensitive net income is to changes in sales. It helps founders understand the trade-offs between risk and scalability in their cost structures.

Contribution margin measures profitability at the unit level. It is the revenue remaining after subtracting variable costs, used to pay down fixed costs and eventually generate profit.

A practical guide to understanding outsourcing, determining when to contract external help versus hiring employees, and managing the risks involved in building a startup team.