Cost structure, honest.
In context: Stage 04 · Evaluate · Business model canvas
Every model has costs. This block forces you to name the big ones, and to be honest about where they hide.
Cost Structure names the most important costs in the model and asks whether it is cost-driven or value-driven. Split them into fixed costs that you pay whatever the volume, and variable costs that scale per unit. Get this honest and the rest of the canvas stops flattering you.
What this block is
Cost Structure is the part of the canvas where you set out the most important costs the model carries, and decide whether the model is cost-driven (lean, price-led) or value-driven (built around a premium the buyer pays for). It is the counterweight to the revenue side. If the canvas is a claim about how the business makes money, this block is the bill that lands first.
The useful split is fixed versus variable. Fixed costs you pay whatever the volume: tooling, certification, the marketing you commit to. Variable costs scale with each unit you make and ship: materials, fulfilment, the per-unit share of production. Confuse the two and the maths quietly lies to you, because fixed costs only ever look cheap once they are spread across volume that has not happened yet.
How it applies
On the £149 proofing box, I keep the two columns strictly apart. Variable cost is the £38–55 bill of materials, the Stoke-on-Trent ceramic body plus the Manchester PCB, and then fulfilment on top of that per unit. Fixed cost is the ceramic tooling, the certification work (UKCA and BS EN 61010), and the marketing spend. None of those fixed lines care how many boxes I sell.
The honest move is amortisation. That tooling does not cost £0 per unit and it does not cost the full lump on unit one either. It spreads across the 500–1,000 first run, and the per-unit number you pencil in depends entirely on which end of that range actually sells. Plan against the low end, not the figure that makes the model look comfortable.
Where it fits
Cost structure and revenue streams are the two blocks that decide whether the model holds, because everything else on the canvas is a promise until these two are weighed against each other. Set them side by side on the Business model diagram and you can see at a glance whether the numbers survive contact with reality.
Try it yourself
Take your own product and write two columns: fixed and variable. Be ruthless about which is which, then put a real number against each line, including the unglamorous ones like certification and fulfilment. The cost you forgot is usually the one that decides the model.
Or run the guided version and let the Sprint walk you through it. Start the Free Sprint →
The Business Model Canvas is the work of Strategyzer (Alexander Osterwalder & Yves Pigneur), shared under a Creative Commons Attribution-ShareAlike 3.0 licence. Source: strategyzer.com.
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