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 include rent, salaries, and insurance. Understanding fixed costs is important for businesses because they affect overall profitability. Since these costs must be paid regardless of revenue, a company needs to ensure that its sales are high enough to cover them. This helps in budgeting and financial planning, allowing businesses to make informed decisions about pricing and investment.