What do AWS, WeWork, Stord, Gusto and RocketLawyer have in common? They provide cloud computing services, office space, warehouse storage, payroll management and access to legal templates, respectively — at first glance, not a particularly congruent set of services.
But they are alike in the economic purpose they serve for their customers. Each of these services takes a fixed cost — a bank of servers, a lease, a legal retainer — and transforms it into a variable cost. As a refresher, a fixed cost stays constant regardless of output, and variable costs scale with the output of a business.