In a perfect internet market, the marginal cost of a digital product is zero. But no market is perfect, so, what we have in reality is that the marginal cost tends towards near-zero. What that means is that the transaction and distribution costs stay low even as output increases. Whenever you attain that positioning, your unit economics improves since you are essentially having accelerating returns which keep compounding.
Before you launch that digital product, understand this plot. If you do not, you will struggle to scale that product. The mastery of marginal cost is the mastery of digital business growth. Your scalable advantage is built on the “physics” bounded by distribution cost and transaction cost.
Unit Economics. Marginal Cost. Understand both, and the path to the mountaintop becomes clearer. How do you keep growing without increasing marginal cost?
Tekedia Mini-MBA edition 16 (Feb 10 – May 3, 2025) opens registrations; register today for early bird discounts.
Tekedia AI in Business Masterclass opens registrations here.
Join Tekedia Capital Syndicate and invest in Africa’s finest startups here.
https://youtu.be/P75hzh3e190
---
Register for Tekedia Mini-MBA (Feb 10 - May 3, 2025), and join Prof Ndubuisi Ekekwe and our global faculty; click here.