Cost Structure

From Open Source Ecology
Jump to: navigation, search


In order to sell a product, one must determine the sale price - which is a part of the the overall cost structure of the enterprise. It can't be too high or too low - it must be justified by the goals of the enterprise. Sale price can vary significantly. The key is to be able to justify the sale price - via clarity on the Unique Value Proposition.

Cost structure refers to both the inputs and outputs - cost of production, selling price, everything in between.

See more about Pricing at wikipedia -

Extreme Enterprise Cost Structure

HintLightbulb.png Hint: See Extreme Enterprise Cost Structure

General Notes

Cost structure is the exact cost of product delivery from R&D, materials, production, training, labor, marketing, distribution, sale, and support over the lifetime of a product.

Cost Structure determination during a development phase of a product is iterated rapidlyi and depends on:

  1. Design optimization - for simplicity and modularity as embodied in OSE Specifications
  2. Sourcing strategy
  3. Production tooling
  4. Production tooling
  5. Production labor costs
  6. Distribution development
  7. Level of support