The aforementioned calculations, though simple, are easy tools to see how your costs are distributed and find ways to save money. However, you'll need to use the following equation to get your actual fixed costs over time:
Fixed Cost = Cost + Depreciation + Interest on Investment + Insurance and TaxesThis helps you see how much you'll be paying into the future on your big fixed costs, like a mortgage or piece of equipment. While it seems complicated, all this really does is tell you how much your equipment would be worth if you quit the business and tried to sell it.


For this section, assume you're looking 10 years into the future. You can, however, set any length of time you'd like.
 This is where you input the normal fixed cost. For example, say you bought a postcard printing press worth $10,000. This is the Cost. However, imagine that you are paying for it with a loan, only paying $2,000 a year. You would still put down $10,000 for Cost.


Don't forget to add maintenance and upkeep costs on the press. For simplicity sake, assume here that it is only $100 a year. That means, after 10 years, you pay $1,000 in repairs (10 x $100).

TFC over 10 Years on Printing Press = $11,000 + Depreciation + Interest on Investment + Insurance and Tax

, Ten years from now, you may want to dump the printing press for a new one. Even if you didn't, you need to account for the amount of money you'd sell it for as a cost. This seems weird, at first, but think of it as "spending the money to keep the press." For example, say most Printing Presses are worth $500 after 10 years. By not selling it until then, you're giving up that $9,500 that you could have made by selling it. Thus:



TFC over 10 Years on Printing Press = $11,000 + $9,500 + Interest on Investment + Insurance and Tax.
 You might have bought the printing press on loan, meaning you're paying interest on it each time you pay. For simplicity's sake, assume that your interest rate is only 1% a year. After 10 years, you accrue an extra $1,000 of interest. Add it into your cost.



TFC over 10 Years on Printing Press = $11,000 + $9,500 + $1,000 + Insurance and Tax.
 You may need to pay $500 a year on your new investment to the IRS, plus an extra $10 a month to keep it ensured ($120 a year). Other costs could be thrown in as well, like an annual safety inspection that you must get for the machine costing $100. This is where you accrue the final costs that you must pay on your printing press over 10 years. So:



TFC over 10 Years on Printing Press = $11,000 + $9,500 + $1,000 + $720.
 This is a great way to see the effects of long-term investments. Instead of just seeing your day to day costs, you can plan your long-term strategy around this cost, adjusting the price of your product accordingly.



TFC over 10 Years on Printing Press = $11,000 + $9,500 + $1,000 + $720 = $22,220
Adjust your fixed cost estimates for depreciation, interest, and taxes to determine the health of your business.
Input the total cost of the item for "Cost.",
Find depreciation by estimating what your equipment would be worth when you sell it.
Factor in any interest payments made to determine what you actually bought the machine for.
Add in the extra payments you must make on the machinery, including insurance and taxes.
Add up these costs to get your Total Fixed Cost, the amount of money your machine will cost you over 10 years if you didn't sell it.
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