Cost Structure
Also known as: Operating Costs, COGS, Fixed and Variable Costs
H-BMC Block 13 — what it costs to operate the business model at scale.
Full Definition
Cost Structure maps the fixed and variable costs required to deliver the value promise, maintain key resources, execute key activities, and sustain key partnerships. In healthcare, cost structure analysis must account for the extended pre-revenue period required for regulatory clearance and clinical evidence generation. Understanding cost structure is essential for determining the capital required to reach key milestones and for modeling unit economics.
Example
A medical device company's cost structure includes manufacturing COGS (variable), direct sales force (largely fixed), clinical affairs (fixed), regulatory affairs (fixed), and G&A. At target volume, COGS represents 32% of revenue, yielding a gross margin of 68%.