Cost Structure

Cost Structure

Brief

most important costs incurred while operating under a particular business model. 

Creating and delivering value, maintaining Customer Relationships, and generating revenue all incur costs.

 

Types

·Cost-driven

focus on minimizing costs wherever possible. This approach aims at creating and maintaining the leanest possible Cost Structure

 

·Value-driven

less concerned with the cost implications of a particular business model design, instead focus on value creation

 

·Economies of scale

Cost advantages that a business enjoys as its output expands. Larger companies, for instance, benefit from lower bulk purchase rates

 

·Economies of scope

Cost advantages that a business enjoys due to a larger scope of operations. In a large cops, for example, the same marketing activities or Distribution Channels may support multiple products.

 

·Fixed costs

Costs that remain the same despite the volume of goods or services produced.

such as manufacturing companies, are characterized by a high proportion of fixed costs.

 

·Variable costs

Costs that vary proportionally with the volume of goods or services produced. Some businesses, such as music festivals, are characterized by a high proportion of variable costs.

 

Resources

How do I use the Cost Structure building block of the Business Model Canvas?

https://strategyzer.uservoice.com/knowledgebase/articles/1194382-how-do-i-use-the-cost-structure-building-block-of

How do I use the Cost Structure building block of the Business Model Canvas? – Have a question? Find the answer here.