In a perfect internet market, the marginal cost of a digital product is zero. But no market is perfect, so, what we have in reality is that the marginal cost tends towards near-zero. What that means is that the transaction and distribution costs stay low even as output increases. Whenever you attain that positioning, your unit economics improves since you are essentially having accelerating returns which keep compounding.
In theory, you can just keep growing, unlimited by the typical industrial age marginal cost which begins to go low, but quickly ramps up with output (recall your average fixed cost shape in secondary school economics) thereby restricting growth.
If you do not understand how marginal cost affects your business, you cannot drive growth in that business. Make time and study marginal costs. It is the most important cost you must understand if you want to develop a growth playbook.
Yes, before you launch that online business, I want you to understand Marginal Cost. Watch the videos.
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