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Cost Structure

Cost structure refers to the costs, both fixed and variable, that make up a business’s overall expenses. All businesses strive to minimize the cost of creating and selling their products or services. The cost structure refers to all the expenses incurred from the beginning to the end of the production or sales process.

What Small and Midsize Businesses Need to Know About Cost Structure

Because they operate on a more limited scale, small businesses can more easily analyze their current cost structure to correct weaknesses and implement improvements. Auditing and altering their cost structure is necessary to respond to current economic conditions. For instance, since wages are rising in some industries, some SMBs are increasing prices to keep their cost structure profitable.

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