Economies of scale
Etymology
The word "economy" traces to Greek oikonomia, "household management," and "scale" here means size of operation. The systematic study of how per-unit costs fall with volume developed through nineteenth- and twentieth-century industrial economics, with Alfred Marshall distinguishing internal economies (within a firm) from external ones (across an industry). The phrase is now common in business talk, sometimes stretched to imply that bigger is always cheaper, ignoring the real phenomenon of diseconomies of scale.
noun phrase · /ih-KON-uh-meez uv skayl/
The cost advantages a producer gains as output grows, because fixed costs spread over more units and processes get more efficient.
What it names
Why bigness can be cheapness — why a giant retailer undercuts the corner store and why the second million users cost a software firm almost nothing — which underlies much of why markets tend toward a few large players.
Example
Their pricing looks impossible until you realize the economies of scale — one warehouse serving the whole region makes each order cost a fraction of ours.
Related idea
Economies of scale come from producing more of the same thing; economies of scope come from producing different things together, like a dairy that makes both milk and cheese from one supply chain.