📖 Business terms

Economies of scale

Getting cheaper per unit as you get bigger.

Spreading fixed costs over more units, buying in bulk and specialising all lower the cost per unit as volume grows.

It's why big players can undercut small ones — and why size can be a moat.

🧮 Example

A chain buying coffee beans for 500 stores negotiates a 20% lower price than a single café.

🎯 Interview tip

Also mention diseconomies — beyond a point, complexity can raise costs again.

Used in

Learn next

Fixed vs variable costs

Costs that stay put vs costs that grow with sales.

Synergies

Extra value created by combining two companies.

Value chain

Every step from raw material to happy customer.

The Case Flex weekly

One concept. One case breakdown. One practice prompt. Every week, in simple words.

An AI interviewer runs you through a case, pushes back, and scores your reasoning. Free to start.