From the other thread on this subject:
Quoted:
A reality of manufacturing is that as volume goes up then cost goes down not the opposite.
View Quote
That's not always true.
We are a defense related manufacturer, and our business is up over 60% this year. We are scrambling with pages of Gov't rated orders that HAVE to be built first.
Consequently, we are paying a LOT of premium expedites to get materials in, we are paying more to folks that have the materials in stock, rather than waiting for a lower cost vendor, we're paying overtime, added $500,000 in capital improvements, and pay a lot of expedited shipping to make up for late deliveries.
Cost don't necessarily go down with increased volume. Mr. Sony himself when he was starting out quoted a big NYC department store an INCREASED price for a higher volume of transistor radios. They were flabbergasted, and proclaimed your statement. Mr Sony countered with the fact that he would have to build a new factory, buy new machinery and hire and train new people to do the volume they required. The Department store acknowledged this, and paid the higher price.
Now one big benefit is after you hit your break even point, your G&A and overhead become additional profit.