The Economy Of Scale Explained

Economy Of Scale Explained

Wikipedia describes the Economy Of Scale as "the cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output decreasing with increasing scale."

At first, it's difficult to understand, but it's basically why a chicken sandwich doesn't cost $50.

This is basically how companies make themselves richer. Production becomes more efficient and cheaper, the more you produce. As ironic as that sounds, it actually makes sense.

The Economy Of Scale is the reason why people scale-out their businesses. It's cheaper to sell 100 products at $50 instead of 10 products at $500.