Economies of Scale
The cost advantages that come from getting bigger: as volume rises, the cost per unit falls because fixed costs spread wider and you gain buying and operating leverage.
Why it matters
Economies of scale can become a moat, larger players undercut smaller ones on cost, which is why some markets tip toward a few winners. Knowing whether your business has them shapes how aggressively you should grow.
For example
A large e-commerce player negotiates cheaper shipping and spreads its fixed tech costs over millions of orders, so its cost per order falls below a small rival's.
Related terms
Go deeper
See how founders actually handle this on Growing and marketing, part of the Starting Up hub.
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