Fixed costs are expenses that do not change with the level of production or sales. These costs remain constant regardless of how much a business produces or sells. Common examples of fixed costs include rent, salaries, and insurance. Businesses must pay fixed costs even if they do not generate any revenue. Understanding fixed costs is essential for budgeting and financial planning, as they impact overall profitability. By managing fixed costs effectively, companies can improve their financial stability and make informed decisions about scaling operations.