Economies of scale

Jun 28, 2020 12:49:28 AM | by Avanish Pandey

 

 

Discuss economies of scale

 

The concept of economies of scale is the ability to reduce costs and gain efficiency when operating at a larger scale in comparison to operating at a smaller scale.

Cloud providers such as Microsoft, Google, and Amazon are large businesses, and are able to leverage the benefits of economies of scale, and then pass those benefits on to their customers.

This is apparent to end users in a number of ways, one of which is the ability to acquire hardware at a lower cost than if a single user or smaller business were purchasing it.

 

Single server and arrow pointing to three bigger servers overlaid on a cloud.

 

Storage costs, for example, have decreased significantly over the last decade due in part to cloud providers' ability to purchase larger amounts of storage at significant discounts. They are then able to use that storage more efficiently and pass on those benefits to end users in the form of lower prices.

✔️ There are limits to the benefits large organizations can realize through economies of scale. A product will inevitably have an underlying core cost, as it becomes more of a commodity, based on what it costs to produce. Competition is also another factor which has an effect on costs of cloud services.

 

Tags: 508 Compliance Testing, Testing, economy

Avanish Pandey

Written by Avanish Pandey

Avanish Pandey is the 1st and current CEO of Astaqc Consulting. Before joining as CEO of Astaqc, he was a Manager and Sr. Quality Assurance Engineer handling a team of QA's. Avanish was Born and raised in Faridabad, a city and district in Haryana, NCR region of Delhi and he received a bachelor's degree in Computer Science from the MDU.

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