What is Economies of Scale?
A definition of Economies of Scale
“Economies of scale refer to the cost advantages that businesses obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale as fixed costs are spread out over more units of output.”

Business Glossary > What is Economies of Scale?
Examples of Economies of Scale in a Sentence:
Economies of scale help companies reduce their production costs.
By increasing production, the firm achieved significant economies of scale.
Economies of scale can be a major factor in competitive industries.
Why is Economies of Scale Important in Business?
Understanding economies of scale is crucial for businesses looking to optimize their operations and reduce costs. It allows them to leverage their size to achieve competitive pricing and enhances profitability through efficiency.
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Associated Terms
Here are some associated business terms and synonyms for “Economies of Scale”:
- Cost Efficiency
- Scale Advantage
- Production Efficiency
Walmart Economies of Scale
Walmart leverages economies of scale by purchasing massive volumes of products, which allows it to negotiate lower prices with suppliers and pass savings on to consumers, maintaining its competitive edge in the retail market.
Final Notes on Economies of Scale
When entrepreneurs think about expanding their operations, they should consider the benefits of economies of scale in terms of reduced costs and increased efficiency. This consideration is vital for achieving long-term growth and sustainability.
This has been a definition of Economies of Scale meaning.
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