Investor Connect Podcast

Economies of Scale

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

Economies of scale is an economic principle in which the costs of delivering a product go down as the volume goes up.

Over the life of a product, the cost per unit should decrease.

For startups, this means the cost to build your product should go down as you ramp up sales.

Economies of scale can come from a reduced cost of materials as the startup purchases higher volumes. 

It can also come from deploying technology tools and spreading that cost over more units or customers.

There are also financial benefits.  As the startup grows larger it can raise funding or take on loans at a lower rate.

Economies of scale can help the company grow to a larger size.

It can also help increase profits. 

Customers should see lower prices and better products.

Employees should see higher wages.

It’s important to plan for economies of scale and build it into the business model. 

 

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.

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Direct download: Economies_of_scale.mp3
Category:general -- posted at: 5:00am CST

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