Chapter 2

Economies of Scale

The principle of economies of scale states that as companies grow, they become more effective at managing shared operations. These operations include HR and hiring, taxes, accounting, internal operations, marketing, and large purchases via contracts, which often lead to better discounts.

Due to these efficiencies, companies can save or earn more, which allows them to reduce the cost of their services to customers. This is known as the 'price per unit.'

While it's not possible to reduce costs to zero—since some underlying infrastructure is always necessary to provide services—the larger the scale, the more benefits can be passed on to customers.

In fact, at its current scale, Microsoft can offer multiple services for free due to how minimal the cost is for them.