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Sunday, August 17, 2014

Cost Structure 08-18




Cost Structure


      Describes all costs incurred to operate a business model

      Can be easily calculated after defining

     Key activities

     Key resources

     Key partnerships

      What are the most important costs inherent in our business?

      Which key resource are most expensive?

      Which key activities are most expensive?

      Is our business model Cost Driven .vs. Value Driven?

      Cost driven business model

     Focus on minimizing cost

     Use low price value proposition

     Maximum automation

     Extensive outsourcing

      Value driven business model

     Focus on value creation

     Premium value proposition

     High degree of personalized services

      Cost structures can have the following characteristics:

     Fixed cost: Constant cost despite volume of production

     Variable cost: Proportional cost with output volumes

     Economies of scale: Cost advantages as output expands and average cost per unit drops

     Economies of scope: Cost advantages due to large scope


Please read the main article about innovative business Models  Here



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