Fixed costs continue whether or not you sell anything: rent, insurance, salaried staff, software, financing payments, the phone.
Variable costs only happen when work happens: materials, subcontractors, fuel on the job, hourly labour on a job.
Why the split matters more than the total
Because it tells you what a slow month costs.
A business that is mostly variable can absorb a quiet period — the costs fall with the work. A business that is mostly fixed keeps paying at full rate through a month with no revenue, and that is where a bad quarter turns into a real problem.
Two businesses with identical annual costs can have completely different tolerance for a bad month, and the split is the whole reason.
The ones that pretend to be variable
Some costs feel variable and are not.
A salaried technician is a fixed cost regardless of how many jobs they run. A leased van is fixed for the term. A subscription per seat is fixed until you actually remove the seat.
Treating those as variable when planning is how a business commits to costs it cannot unwind when the work slows.
Using it
Raising fixed costs raises break-even permanently. Raising variable costs does not.
That is the argument for subcontracting or hiring hourly at the point where demand is unproven, and for converting to fixed only once the work is reliably there. It costs more per hour and it costs less per bad month.