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Economics
Marginal Cost
The extra cost of producing one more unit of a product or service.
Businesses watch marginal cost closely when deciding prices and production levels. If marginal cost is lower than the selling price, making more usually increases profit.
Digital businesses love low marginal costs because they can scale massively without huge extra spending.
It’s the cost of baking one additional cookie once the oven is already hot and the ingredients are out.
Real world: A software company’s marginal cost for one more user is almost zero (just a little server electricity). A car manufacturer’s marginal cost for one more vehicle is thousands of pounds in parts and labor.
💡 The lower your marginal cost, the easier it is to make serious money as you grow.