Important Cost Structures

Innovation and Business Model

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Course Modules

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Module 1	Innovation and Business Model
Unit 1	Overview of Innovation Design Thinking
Unit 2	Understand the Problem
Unit 3	Ideate
Unit 4	Prototype
Unit 5	Evaluate and Refine
Unit 6	Define your Customer Segments
Unit 7	Define your Value Proposition
Unit 8	Channel Strategies
Unit 9	Customer Relationship Types
Unit 10	Key Revenue Streams
Unit 11	Key Resource Types
Unit 12	Key Activities
Unit 13	Key Partnerships
Unit 14	Important Cost Structures
Unit 15	Business Model Innovation Posttest

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Unit Video

Unit Summary

The two essential cost structure elements:

Fixed costs
Variable costs

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My monthly costs are __________ and the profit percentage I make per product I sell is:

The most important cost positions in my business model are:

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Transcript

In this video, you will learn the 2 most important cost structures in your business.

Cost structure refers to all the costs that you incur to deliver on your business model. Keeping your costs under control is essential to maintain a healthy business.

2 Essential Cost Structure elements include:

Fixed Costs – which refer to all costs that you need to incur whether you sell or not. These could include factory, general administration staff, rent, management staff costs etc..
Variable Costs – which refer to costs that are associated with the sales of your products or services. The more you sell the more these costs would go up. Variable costs include things like the raw material for your products, or cost of consultants that you would etc..

When you are starting up a business keeping the fixed costs as low as possible is essential so that you don’t run out of cash too quickly before you start selling enough products and services to cover your costs.

Quotes

Cutting prices or putting things on sale is not sustainable business strategy. The other side of it is that you can’t cut enough costs to save your way to prosperity. Howard Schultz