Engineering student here although I figured this post is more suited to an economics thread!
I understand this is a very vague question, however I am desperately trying to calculate a rough estimate of how much cheaper a product will be if I buy 100,000 or 1,000,000 units rather than one?
So for example, if a part I am trying to manufacture is $50, how much cheaper could I expect this part to be if I ordered 10, 1000, 100,000 or 1,000,000 units?
Thanks very much! All help is appreciated!
Variation of Cost per unit with Quantity purchased Watch
- Thread Starter
- 03-03-2016 11:44
- 03-03-2016 13:10
In economics we assume that cost per unit will fall as output increases. This is called falling average costs and is caused by economies of scale. So the bigger the output the lower the cost per unit. However, we cannot say how much cheaper it will cost to produce as it depends on the fixed costs and the extent to which they can be spread over more output and the discount that can be gained by purchasing the raw materials in bulk to make the product.
Dr Mark Potts