Are marginal costs fixed or variable costs? Marginal costs are a function of both fixed and variable costs. Fixed costs of production are considered the costs that occur on a regular basis such as rent or employees' salaries. By contrast, a variable cost is one that changes based on output and production costs. For example, a country club with a swimming pool may spend more money on chlorine in the summer months. Marginal costs are defined as the overall change in price when a buyer increases the amount purchased by one unit.