What is cost structure?
A company’s cost structure is the composition of its fixed and variable costs across the business — rent, salaries, infrastructure, marketing, R&D, COGS — and how these costs scale with revenue. Understanding cost structure is central to unit economics, pricing decisions and operating leverage.
Startups with high fixed costs and low variable costs (most SaaS) benefit from scale leverage; startups with high variable costs (most marketplaces and physical-goods commerce) need to manage gross margin discipline. Cost structure modelling is a standard component of fundraising and investor diligence.