Khan Academy » Finance » Microeconomics » Fixed, Variable, and Marginal Cost
Khan fills a spreadsheet on Microsoft Excel! Exciting stuff.
But really though, he builds a mock software engineering company and illustrates the concepts of fixed, variable, and marginal costs. I don’t know how much I like using lines of code as a measure of productivity (doing more with less code is better!), but I don’t know how else you could…
Regardless. Fixed costs are your costs that don’t change no matter how many programmers you hire — cost of the building, cost of paying your product manager, etc. Variable costs change in proportion to some metric, in this case the number of programmers — salaries, machines, food, etc. Marginal cost is the amount you pay for one more bit of productivity (in this case, lines of code).
Speaking of which, I have errors in my tests for work that I said I’d get done over the weekend. Me and my big mouth.