We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What Is a Decreasing-Cost Industry?

K.C. Bruning
Updated May 16, 2024
Our promise to you
SmartCapitalMind is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At SmartCapitalMind, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject-matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

A decreasing-cost industry is one in which the cost of an item declines as its production increases. The phenomenon is referred to as a downward-sloping, long-run supply curve. This is caused by the growth of an industry, which typically results in more competitors, less demand, and lower perceived value of the product. Depending on the nature of the business, decreasing-cost industry can either cause the decline of a company or simply be a part of its natural evolution.

One of the most common reasons for decreasing-cost industry is competition. When the market for a product expands, competitors will typically step in to meet increased demand. While existing companies may be able to charge a premium for brand recognition or perceived value due to experience, they will often need to lower prices at least somewhat in order to stay in business.

In some cases, decreasing-cost industry happens because an increase in production does not significantly affect the cost of producing the product. This is common with knowledge-based products such as software. It can also be a factor in the production of items which can be significantly improved with greater efficiency. Once the company has learned how to maximize its efforts, it can increase its customer base by lower prices.

Decreasing-cost industry may also be the result of a company’s decreasing cost of doing business. This can be due partly to the initial investment made by a company in start-up costs such as equipment, recruiting, and hiring. Once a company has reached a certain level of success, the costs related to these elements tend to drop. A company that has successfully produced a product for a certain period of time will often also have lower production costs. This is often because it has through trial and error developed the most efficient way of making and distributing the product.

Other types of industries include increasing-cost and constant cost. Increasing-cost industry happens when prices go up due to an increase in demand for manufacturer resources. This can include an increase in salary for employees whose skills are in demand and higher prices for inventory items that are in short supply. Constant cost industry is a situation in which increased demand does not affect the cost of production. This is commonly seen in areas such as the retail industry, where the entry of a new business does not tend to affect prices or employee salaries

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
K.C. Bruning
By K.C. Bruning
Kendahl Cruver Bruning, a versatile writer and editor, creates engaging content for a wide range of publications and platforms, including SmartCapitalMind. With a degree in English, she crafts compelling blog posts, web copy, resumes, and articles that resonate with readers. Bruning also showcases her passion for writing and learning through her own review site and podcast, offering unique perspectives on various topics.
Discussion Comments
K.C. Bruning
K.C. Bruning
Kendahl Cruver Bruning, a versatile writer and editor, creates engaging content for a wide range of publications and...
Learn more
SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.

SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.