Startup Terms Glossary
What are Economies of Scale?
Economies of scale are a cost advantage that occurs when output increases. The result is a decrease in product cost. In general, as the quantity of product production increases, the per-unit fixed cost decreases. This happens as fixed costs are spread over more units, and production becomes more efficient.
Economies of scale benefit both company and customer as prices lower as well.
Economies of Scale Examples
Types of economies of scale a startup or company might use:
- Example 1. Internal economies of scale
- Example 2. External economies of scale
Sources of economies of scale:
- Example 1. Purchasing
- Example 2. Managerial
- Example 3. Technological
Here’s a article about economies of scale.
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Corporate attorney with extensive experience managing the legal affairs for start-up, small, mid-size, and private equity backed companies. Highly skilled at drafting, negotiating, interpreting and closing contracts and transactions of all types. Have earned a reputation as being practical, down-to-earth, and possessing a keen ability to synthesize complicated legal issues and communicate to clients in a relatable and easily understandable fashion. My background includes working for the Chief Judge of the Virginia Court of Appeals, at private law firms, and, since 2019, serving as the General Counsel for multiple start-up, closely-held, and private equity backed companies within the energy, construction, and franchising industries.
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