Examples of Cost Structure in the Business Model Canvas

In business, the term "cost structure" refers to the way in which a company's expenses are categorized.

For example, some businesses may have a very simple cost structure with only two categories:

• direct costs and

• indirect costs.

Others may have a more complex cost structure that includes many different types of expenses. The important thing to remember about cost structures is that they can vary widely from one business to another. There is no single "right" way to categorize your expenses. The key is to choose a system that makes sense for your particular business and will help you make better decisions about where to allocate your resources.

Here are some common examples of expense categories that can be used in a cost structure:

• Raw materials: This category includes all of the ingredients or components needed to produce your product or service.

• Labor: This category covers wages and benefits paid to employees who work directly on producing your product or service (as opposed as those involved in administrative tasks, research & development, etc.).

• Manufacturing overhead: If you manufacture products, this category includes any other production-related costs not already accounted for under raw materials or labor (e.g., rent for factory space, utilities, equipment maintenance).

• Selling & marketing: All expenditures related to promoting and selling your product or service fall into this category (e.. advertising , sales commissions , trade show booths) .

• General & administrative : Finally ,this catchall category houses all remaining organizational expenses not included elsewhere( e g legal fees office supplies insurance).

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