Cost Structure is about the expenses of a company operating its business model.
There are 2 main categories of Cost Structures:
– Value Driven: it focuses on the value of the product not necessarily looking for producing it at the lowest possible cost (for instance Luxury Products)
– Cost Driven: it focuses on minimizing the costs of the product or service as much as possible (for instance Mass Production Industries)
Some questions that are useful to understand the content of this block are
– Which are the most important costs inherent in the company’s business model?
– Which Key Resources are most expensive?
– Which Key Activities are most expensive?
– How much do our Partnerships cost?
Cost Structure is fundamental in the Business Model Canvas since it determines how the business invest its money.
A good way to represent the company’s Revenue Streams and Cost Structure is to use Cashflow Canvas.
Cashflow Canvas is a financial tool that helps a company to design and challenge their business’ profit model by:
– Defining an operating budget
– Forcing to validate and adjust the business model from a financial standpoint
Cashflow Canvas is based on 8 blocks
1. Revenue Streams
2. Direct Costs
3. Price Points
4. Mapping Assumptions
6. Space + Operations
7. Marketing + Sales
8. Additional Expenses
Learn more about the Cashflow Canvas by following this link.
Business Strategy | Product Marketing | Executive Master eCommerce Management | Business Innovation Master | MSc
I am driven by my personal growth and of people/contexts that surround me.
I followed a professional path in Valentino Fashion Group and Luxottica during which, thanks to the ability to understand different businesses and interests, I was able to succeed in Operations, Merchandising and Retail.
These organizations have exploited my ability to mediate and translate needs/constraints into practice, assigning me to Project Management roles.
Luxottica relied on my ability to analyze, to anticipate things and to imagine/implement solutions by appointing me in Supply Chain Management department and assigning me to the Product Management of IoT solutions for Anti-counterfeiting and Retail digitalization.
During this professional path, I also developed my leadership by managing teams to build Processes, Organizations, Systems and Governance Tools.