For example, the deployment of an application for online business license renewal might allow businesses to enjoy automatic notification of license expiration as well as a 24-7 renewal option free of paper work. Government employees, whose job it is to enforce accurate license renewals and timely payment, would clearly benefit as well. Neither of these terms, however, observes the principle of leveraging the Internet to simplify government. The first type of cost is termed a fixed cost, and is defined as the up-front expenditures that a business makes irrespective of the volume of goods or services that the business produces. Examples of fixed costs include land, equipment, buildings and advertising.
Variable costs are costs that can be allocated to a specific unit of production.
In the automotive industry, a variable cost would include the bolts that attach various parts or the paint that is applied to the exterior of the car's body. The total amount of variable costs that businesses or governments face corresponds directly with the total output they generate. In the tax payment-processing world, variable cost includes the hourly labor needed to process payments, answer questions, and maintain records of citizen transactions. In the IT environment, variable costs include transaction payment-processing costs, telecommunication costs and other costs that vary directly with total output. It is important that these terms not muddle the objectives of e-government.