{"id":999971546,"date":"2025-03-28T18:33:05","date_gmt":"2025-03-28T11:33:05","guid":{"rendered":"https:\/\/bizzi.vn\/?p=999971546"},"modified":"2026-06-09T13:48:14","modified_gmt":"2026-06-09T06:48:14","slug":"what-is-marginal-cost","status":"publish","type":"post","link":"https:\/\/bizzi.vn\/en\/what-is-marginal-cost\/","title":{"rendered":"What is Marginal Cost? 6 Effective Ways to Reduce Marginal Cost"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">Marginal cost is an important indicator to help businesses <strong>production optimization<\/strong>. Controlling and reducing marginal costs will increase profits, improve performance and better compete in the market. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">In this article, Bizzi will provide you with full information related to <strong>What is marginal cost?<\/strong> as well as how to optimize costs to maximize profits.<\/span><\/p>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_80 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Index<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewbox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewbox=\"0 0 24 24\" version=\"1.2\" baseprofile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/bizzi.vn\/en\/what-is-marginal-cost\/#Dinh_nghia_va_dac_diem_chi_phi_can_bien_la_gi\" >What is the definition and characteristics of marginal cost?<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/bizzi.vn\/en\/what-is-marginal-cost\/#Dinh_nghia\" >Define<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/bizzi.vn\/en\/what-is-marginal-cost\/#Dac_diem_chi_phi_can_bien\" >Marginal cost characteristics\u00a0<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/bizzi.vn\/en\/what-is-marginal-cost\/#Cong_thuc_tinh_chi_phi_can_bien\" >Marginal cost formula<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/bizzi.vn\/en\/what-is-marginal-cost\/#Y_nghia_va_vai_tro_cua_chi_phi_can_bien\" >Meaning and role of marginal cost<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/bizzi.vn\/en\/what-is-marginal-cost\/#Moi_quan_he_giua_Chi_phi_can_bien_Marginal_Cost_va_Chi_phi_binh_quan_Average_Cost\" >Relationship between Marginal Cost and Average Cost<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/bizzi.vn\/en\/what-is-marginal-cost\/#Duong_chi_phi_can_bien\" >Marginal cost curve<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/bizzi.vn\/en\/what-is-marginal-cost\/#Cac_luu_y_khi_phan_tich_chi_phi_can_bien\" >Notes when analyzing marginal costs<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/bizzi.vn\/en\/what-is-marginal-cost\/#Cach_giam_chi_phi_can_bien_hieu_qua\" >How to reduce marginal costs effectively<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/bizzi.vn\/en\/what-is-marginal-cost\/#Danh_gia_doanh_nghiep_dua_tren_chi_phi_can_bien\" >Evaluate a business based on marginal cost<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/bizzi.vn\/en\/what-is-marginal-cost\/#Hien_dai_hoa_quy_trinh_quan_ly_chi_phi_cung_Bizzi\" >Modernize your cost management process with Bizzi\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/bizzi.vn\/en\/what-is-marginal-cost\/#Ket_luan\" >Conclude<\/a><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"Dinh_nghia_va_dac_diem_chi_phi_can_bien_la_gi\"><\/span><b>What is the definition and characteristics of marginal cost?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h3><span class=\"ez-toc-section\" id=\"Dinh_nghia\"><\/span><b>Define<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<blockquote><p><strong>Marginal Cost (MC)<\/strong> To be <strong>additional costs<\/strong> when producing one more unit of a product or service. This is the additional cost (\u2206C) to create a new unit of output (\u2206Q). Marginal cost helps businesses understand the <strong>variation in total cost<\/strong> when producing additional products and assisting in the <strong>cost management<\/strong> and<strong> production decision<\/strong><\/p><\/blockquote>\n<h3><span class=\"ez-toc-section\" id=\"Dac_diem_chi_phi_can_bien\"><\/span><b>Marginal cost characteristics\u00a0<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><b>Measure only additional costs<\/b><\/p>\n<ul>\n<li>Marginal cost measurement <strong>additional cost<\/strong> (new cost level) when producing one more unit of product.<\/li>\n<li>Not including the <strong>fixed cost<\/strong> or <strong>Cost does not change<\/strong> (<strong data-start=\"3125\" data-end=\"3155\">Constant marginal cost) <\/strong>in production<\/li>\n<\/ul>\n<p><strong data-start=\"434\" data-end=\"485\">Helps businesses focus on additional costs<\/strong><\/p>\n<ul>\n<li>Marginal cost support business <strong data-start=\"526\" data-end=\"563\">focus on additional costs<\/strong> instead of the whole <strong><a href=\"https:\/\/bizzi.vn\/chi-phi-quan-ly-doanh-nghiep-la-gi\/\">production costs in business<\/a><\/strong>, helps optimize <strong data-start=\"614\" data-end=\"636\">production process<\/strong> and minimize <strong data-start=\"651\" data-end=\"663\">waste<\/strong>.<\/li>\n<\/ul>\n<p><b>Depends on production scale<\/b><\/p>\n<p class=\"\" data-start=\"669\" data-end=\"765\">Marginal cost changes when <strong data-start=\"736\" data-end=\"755\">production scale<\/strong> change:<\/p>\n<ul>\n<li data-start=\"771\" data-end=\"936\"><strong data-start=\"771\" data-end=\"793\">Economies of Scale<\/strong> (Economies of scale): Marginal costs can decrease when <strong data-start=\"851\" data-end=\"869\">increased output<\/strong>, thanks to <strong data-start=\"880\" data-end=\"911\">efficient use of resources<\/strong> such as human resources and machinery.<\/li>\n<li data-start=\"942\" data-end=\"1116\"><strong data-start=\"942\" data-end=\"967\">Diseconomies of Scale<\/strong> (Diseconomies of scale): When production exceeds the optimal level, marginal cost may <strong data-start=\"1044\" data-end=\"1056\">increase<\/strong> by <strong data-start=\"1060\" data-end=\"1082\">resource constraints<\/strong> (machinery, human resources, raw materials).<\/li>\n<\/ul>\n<p><b>\u00a0May change over time<\/b><\/p>\n<ul>\n<li data-start=\"1162\" data-end=\"1320\"><strong data-start=\"1162\" data-end=\"1174\">Short term<\/strong>: Marginal costs can fluctuate widely due to factors such as <strong data-start=\"1233\" data-end=\"1248\">ingredient<\/strong>, <strong data-start=\"1250\" data-end=\"1263\">labor<\/strong>, and <strong data-start=\"1268\" data-end=\"1289\">machine productivity<\/strong> change over time<\/li>\n<li data-start=\"1326\" data-end=\"1498\"><strong data-start=\"1326\" data-end=\"1337\">Long term<\/strong>: Firms can reduce marginal costs through strategies <strong data-start=\"1406\" data-end=\"1426\">technology investment<\/strong>, <strong data-start=\"1428\" data-end=\"1461\">Optimize production process<\/strong>, and <strong data-start=\"1466\" data-end=\"1497\">efficient resource management<\/strong>.<\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"Cong_thuc_tinh_chi_phi_can_bien\"><\/span><b>Marginal cost formula<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>To go deeper into the concept <strong>What is marginal cost?<\/strong>, here is the exact calculation formula:<\/p>\n<p><span style=\"font-weight: 400;\">\u2013 General formula: <\/span><b>MC = \u2206C \/ \u2206Q<\/b><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">- In there:<\/span><\/p>\n<ul>\n<li><b>MC<\/b><span style=\"font-weight: 400;\">: Marginal Cost.<\/span><\/li>\n<li><b>\u2206C (Change in cost): <\/b>The change in total cost is calculated by subtracting the total cost of production from the old output from the new output.<\/li>\n<li><b>\u2206Q (Change in output)<\/b><span style=\"font-weight: 400;\">: <\/span>Change in total quantity of products,<span style=\"font-weight: 400;\">is calculated by <\/span><b>new total output minus original total output<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">\u2013 Note: This formula is only<strong> calculate <\/strong><\/span><b>additional cost per unit of product<\/b><span style=\"font-weight: 400;\">, not counting the total cost of the entire production.<\/span><\/p>\n<p><b>For example:<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">A lipstick factory has a total cost of 100 million VND for 1,000 lipsticks.<\/span><span style=\"font-weight: 400;\"><br \/>\n<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">If 100 more lipsticks are produced, the total cost increases to 105 million VND.<\/span><span style=\"font-weight: 400;\"><br \/>\n<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Marginal cost = (105 million \u2013 100 million) \/ (1,100 \u2013 1,000) = 50,000 VND\/lipstick.<\/span><\/li>\n<\/ul>\n<figure id=\"attachment_999971549\" aria-describedby=\"caption-attachment-999971549\" style=\"width: 1200px\" class=\"wp-caption aligncenter\"><img fetchpriority=\"high\" decoding=\"async\" class=\"wp-image-999971549\" title=\"Formula for calculating marginal cost for a specific unit of product\" src=\"https:\/\/bizzi.vn\/wp-content\/uploads\/2025\/03\/cong-thuc-chi-phi-can-bien.jpg\" alt=\"Formula for calculating marginal cost for a specific unit of product\" width=\"1200\" height=\"622\" srcset=\"https:\/\/bizzi.vn\/wp-content\/uploads\/2025\/03\/cong-thuc-chi-phi-can-bien.jpg 700w, https:\/\/bizzi.vn\/wp-content\/uploads\/2025\/03\/cong-thuc-chi-phi-can-bien-300x156.jpg 300w, https:\/\/bizzi.vn\/wp-content\/uploads\/2025\/03\/cong-thuc-chi-phi-can-bien-18x9.jpg 18w\" sizes=\"(max-width: 1200px) 100vw, 1200px\" \/><figcaption id=\"caption-attachment-999971549\" class=\"wp-caption-text\">Formula for calculating marginal cost for a specific unit of product<\/figcaption><\/figure>\n<h2><span class=\"ez-toc-section\" id=\"Y_nghia_va_vai_tro_cua_chi_phi_can_bien\"><\/span><b>Meaning and role of marginal cost<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Marginal Cost (MC) plays an important role in many aspects of business, from production management, pricing, competitive strategy to operations. <strong>financial decision analysis<\/strong>.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Below are the important meanings and roles of MC in each area of the business:<\/span><\/p>\n<p><b>\u2013 In business management:<\/b><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\">Helps optimize production levels, thereby maximizing profits.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Support making correct and optimal management decisions for pricing and business strategies.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Helps managers compare results during plan implementation.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Plays a role in assessing the quantity of goods and services provided to consumers.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Support revenue comparison and make decisions to cut ineffective activities.<\/span><\/li>\n<\/ul>\n<p><b>\u2013 Compare with Marginal Revenue (MR):<\/b><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\">If MR &gt; MC: Profit is likely to increase, so increase output.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">If MR \u2264 MC: Need to improve revenue and cost management, even stop production because it may be losing money.<\/span><\/li>\n<\/ul>\n<p><b>\u2013 In Production:<\/b><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\">Helps determine optimal output levels for maximum profit.<\/span><\/li>\n<li><span style=\"font-weight: 400;\"><strong>Impact on price<\/strong>, support appropriate price adjustment and evaluate production line efficiency, minimize risks and avoid capital loss.<\/span><\/li>\n<\/ul>\n<p><b>\u2013 In Marketing:<\/b><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\">Is the foundation for determining the next marketing steps.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">If the marginal cost of increasing advertising spending is less than the additional revenue, increasing advertising spending is rational.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Helps determine optimal pricing to maximize revenue.<\/span><\/li>\n<\/ul>\n<p><b>\u2013 In Finance:<\/b><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\">Help investors evaluate the feasibility of the project and the profits it brings.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Help managers develop policies to minimize risks and avoid financial losses if costs get out of control.<\/span><\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"Moi_quan_he_giua_Chi_phi_can_bien_Marginal_Cost_va_Chi_phi_binh_quan_Average_Cost\"><\/span><b>Relationship between Marginal Cost and Average Cost<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><b>Average Cost (AC) <\/b><span style=\"font-weight: 400;\">is the cost per unit of output, calculated by dividing total cost by the number of products.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The relationship between Marginal Cost (MC) and Average Cost (AC) is one of the important principles in economics. <strong>microeconomics<\/strong>, especially in<strong> theory of production costs<\/strong>This relationship can be described as follows:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">As output increases, if <\/span><b>MC &lt; AC then AC will decrease<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">When marginal cost is less than average cost, each additional unit of output costs less than average, causing average cost to fall. This is the stage where the firm is taking advantage of economies of scale.<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">As output increases, if <\/span><b>MC &gt; AC then AC will increase<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<\/ul>\n<figure id=\"attachment_999971547\" aria-describedby=\"caption-attachment-999971547\" style=\"width: 1200px\" class=\"wp-caption aligncenter\"><img decoding=\"async\" class=\"wp-image-999971547\" title=\"Understand the relationship between Marginal Cost and Average Cost to take advantage of economic advantages \" src=\"https:\/\/bizzi.vn\/wp-content\/uploads\/2025\/03\/Moi-quan-he-giua-Chi-phi-can-bien-Marginal-Cost-va-Chi-phi-binh-quan-Average-Cost.jpg\" alt=\"Understand the relationship between Marginal Cost and Average Cost to take advantage of economic advantages \" width=\"1200\" height=\"885\" srcset=\"https:\/\/bizzi.vn\/wp-content\/uploads\/2025\/03\/Moi-quan-he-giua-Chi-phi-can-bien-Marginal-Cost-va-Chi-phi-binh-quan-Average-Cost.jpg 660w, https:\/\/bizzi.vn\/wp-content\/uploads\/2025\/03\/Moi-quan-he-giua-Chi-phi-can-bien-Marginal-Cost-va-Chi-phi-binh-quan-Average-Cost-300x221.jpg 300w, https:\/\/bizzi.vn\/wp-content\/uploads\/2025\/03\/Moi-quan-he-giua-Chi-phi-can-bien-Marginal-Cost-va-Chi-phi-binh-quan-Average-Cost-16x12.jpg 16w\" sizes=\"(max-width: 1200px) 100vw, 1200px\" \/><figcaption id=\"caption-attachment-999971547\" class=\"wp-caption-text\">Understand the relationship between Marginal Cost and Average Cost to take advantage of economic advantages<\/figcaption><\/figure>\n<p>When marginal cost is greater than average cost, each additional unit of output costs more than the average, causing average cost to rise. This is the stage where diseconomies of scale appear.<\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">When <\/span><b>MC = AC then AC is at minimum<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">When <\/span><b>MC = AC<\/b><span style=\"font-weight: 400;\">, average cost reaches its minimum. This is the point at which the firm is most cost efficient. At this point, if the firm produces less, average cost will still fall; if it produces more, average cost will begin to rise.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Marginal cost (MC) helps compare the results of implementing the plan, while average cost (AC) is used to evaluate the impact of changes in output on unit costs. This helps the business determine the optimal output level to minimize production costs.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The basic difference between these two types of costs is: MC is a cost <\/span><i><span style=\"font-weight: 400;\">increase<\/span><\/i><span style=\"font-weight: 400;\"> per unit, AC is the cost <\/span><i><span style=\"font-weight: 400;\">on each<\/span><\/i><span style=\"font-weight: 400;\"> unit.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Duong_chi_phi_can_bien\"><\/span><b>Marginal cost curve<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">For a typical business, it usually takes the form of an inverted parabola or a U-shape.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Initially: MC value tends to decrease because costs (fixed + variable) per unit tend to decrease (economies of scale).<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Later stage: By mid-cycle, <a href=\"https:\/\/bizzi.vn\/chi-phi-bien-doi-la-gi\/\"><strong>variable cost<\/strong><\/a> continuously increases, higher than the rate of decrease in fixed costs, causing MC to start to increase.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Turnaround point: The point at which the increase in variable costs equals the decrease in <strong>fixed cost<\/strong><\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">When output is low, MC can be high due to excess production capacity.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">As output increases to the optimal level, MC reaches a minimum value, then increases again if output exceeds the optimal level.<\/span><\/li>\n<\/ul>\n<figure id=\"attachment_999971548\" aria-describedby=\"caption-attachment-999971548\" style=\"width: 1200px\" class=\"wp-caption aligncenter\"><img decoding=\"async\" class=\"wp-image-999971548\" title=\"The marginal cost curve is inverted parabola or U-shaped.\" src=\"https:\/\/bizzi.vn\/wp-content\/uploads\/2025\/03\/Duong-chi-phi-can-bien.png\" alt=\"The marginal cost curve is inverted parabola or U-shaped.\" width=\"1200\" height=\"909\" srcset=\"https:\/\/bizzi.vn\/wp-content\/uploads\/2025\/03\/Duong-chi-phi-can-bien.png 520w, https:\/\/bizzi.vn\/wp-content\/uploads\/2025\/03\/Duong-chi-phi-can-bien-300x227.png 300w, https:\/\/bizzi.vn\/wp-content\/uploads\/2025\/03\/Duong-chi-phi-can-bien-16x12.png 16w\" sizes=\"(max-width: 1200px) 100vw, 1200px\" \/><figcaption id=\"caption-attachment-999971548\" class=\"wp-caption-text\">The marginal cost curve is inverted parabola or U-shaped.<\/figcaption><\/figure>\n<h2><span class=\"ez-toc-section\" id=\"Cac_luu_y_khi_phan_tich_chi_phi_can_bien\"><\/span><b>Notes when analyzing marginal costs<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<ul>\n<li><b>Difficult to apply in some industries:<\/b><span style=\"font-weight: 400;\"> Such as shipbuilding, airplanes, etc. with unfinished products having large value corresponding to revenue. Not counting <strong><a href=\"https:\/\/bizzi.vn\/chi-phi-co-dinh-la-gi\/\">fixed cost<\/a> <\/strong>Including the ending value of work in progress can cause distortions.<\/span><\/li>\n<li><b>Don&#039;t ignore exogenous factors and hidden costs: <\/b><span style=\"font-weight: 400;\">Raw material costs can change according to the market, labor costs can fluctuate due to wage increases or government policies, opportunity costs (can create higher profits if resources are used for other purposes).<\/span><\/li>\n<li><b>Pay attention to economies of scale: <\/b><span style=\"font-weight: 400;\">As production expands, marginal costs can decrease due to economies of scale (<\/span><b>reduce average cost<\/b><span style=\"font-weight: 400;\">). However, if it exceeds the optimal level, marginal costs may increase due to the phenomenon of <\/span><b>economies of scale<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<li><b>Caution should be exercised when applying:<\/b><span style=\"font-weight: 400;\"> Must be presented and explained reasonably, accurately, and in relation to all variables in the particular situation.<\/span><\/li>\n<li><b>Identify variable costs clearly:<\/b><span style=\"font-weight: 400;\"> To calculate accurately, it is necessary to determine which components of the total cost have variations and the specific amount of variation.<\/span><\/li>\n<li><b>Distinguish and understand the nature of marginal cost and average cost<\/b><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Determine calculation time and external factors:<\/b><span style=\"font-weight: 400;\"> Costs can change over the short and long term, influenced by markets, technology, and policies.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Avoid confusion with average cost<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"Cach_giam_chi_phi_can_bien_hieu_qua\"><\/span><b>How to reduce marginal costs effectively<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><b>\u2013 Leveraging economies of scale <\/b><\/p>\n<ul>\n<li aria-level=\"1\"><span style=\"font-weight: 400;\">When producing in large quantities, marginal costs tend to decrease due to better utilization of resources.<\/span><\/li>\n<\/ul>\n<ul>\n<li aria-level=\"2\"><span style=\"font-weight: 400;\">Solution: Increase production when marginal cost is lower than selling price to maximize profit.<\/span><\/li>\n<\/ul>\n<p><b>\u2013 Reduce raw material and production costs<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Negotiate with suppliers to buy raw materials in bulk at better prices.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Improve production processes to save materials and time.<\/span><\/li>\n<\/ul>\n<p><b>\u2013 Technology application &amp; automation<\/b><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\">Apply machinery, <strong><a href=\"https:\/\/bizzi.vn\/tich-hop-erp\/\">ERP software<\/a><\/strong> to reduce labor costs and increase efficiency.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Technology helps reduce errors, avoid waste and improve productivity.<\/span><\/li>\n<\/ul>\n<p><b>\u2013 Optimize human resources and work processes<\/b><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\">Train employees to improve performance and reduce errors in production.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Arrange work properly to avoid wasting labor.<\/span><\/li>\n<\/ul>\n<p><b>\u2013 Good control of fixed and variable costs<\/b><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\">Reduce fixed costs by optimizing rental space and warehouses.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Consider outsourcing some services instead of doing them yourself if it&#039;s cheaper.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Find suppliers with reasonable prices<\/span><\/li>\n<\/ul>\n<p><b>\u2013 Leverage data to forecast demand<\/b><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\">Use data analysis to produce exactly what the market needs, avoiding overproduction and waste.<\/span><\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"Danh_gia_doanh_nghiep_dua_tren_chi_phi_can_bien\"><\/span><b>Evaluate a business based on marginal cost<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Marginal cost (MC) provides important information about the performance, competitiveness, and sustainability of a business in the long run. More specifically, the impact of <strong>What is marginal cost?<\/strong> Based on that, businesses will grasp the financial situation? <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Below are the <strong>Impact of marginal cost on revenue:<\/strong><\/span><\/p>\n<p><b>\u2013 Production efficiency<\/b><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\">If MC decreases as output increases \u2192 The firm is taking advantage of <\/span><b>economies of scale<\/b><span style=\"font-weight: 400;\">, more efficient production.<\/span><\/li>\n<li>If MC increases rapidly when expanding production \u2192 The business may encounter <b>economies of scale<\/b> or the cost of raw materials and labor increased sharply.<\/li>\n<\/ul>\n<p><b>\u2013 What are the pricing and profitability implications of marginal costing?<\/b><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\">If MC <\/span><b>lower than selling price<\/b><span style=\"font-weight: 400;\">, businesses can continue production to maximize profits.<\/span><\/li>\n<li>If MC <b>close to or above the selling price<\/b>, profit margins fall, signaling that the business may be in financial trouble.<\/li>\n<\/ul>\n<p><b>\u2013 Competitive strength<\/b><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\">Businesses have <\/span><b>MC is lower than the opponent<\/b><span style=\"font-weight: 400;\"> maybe <\/span><b>sale price<\/b><span style=\"font-weight: 400;\"> while still maintaining profits, creating competitive advantages in the market.<\/span><span style=\"font-weight: 400;\"><br \/>\n<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Conversely, if MC is higher, the firm may experience price pressure and lose market share.<\/span><\/li>\n<\/ul>\n<p><b>\u2013 Ability to expand business based on marginal cost per volume<\/b><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\">If MC <\/span><b>slow increase in output<\/b><span style=\"font-weight: 400;\">, businesses are able to scale without incurring too much cost.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">If MC <\/span><b>increase rapidly<\/b><span style=\"font-weight: 400;\">, expansion may be unsustainable or require technology investments to reduce costs.<\/span><\/li>\n<\/ul>\n<p><b>\u2013 Financial risk<\/b><\/p>\n<ul>\n<li>If MC is consistently higher than selling price \u2192 The business may be selling at a loss, and needs to re-evaluate pricing strategy and optimize costs.<\/li>\n<li><span style=\"font-weight: 400;\">If MC fluctuates strongly \u2192 Raw material or labor costs may be unstable, affecting long-term financial planning.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">In short, it is possible to evaluate a business based on MC, but it needs to be combined with other indicators such as:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Gross profit &amp; net profit<\/b><span style=\"font-weight: 400;\"> \u2192 See if the business is making a profit.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Profit Margin<\/b><span style=\"font-weight: 400;\"> \u2192 Assess profitability.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Fixed costs &amp; variable costs<\/b><span style=\"font-weight: 400;\"> \u2192 Understand the cost structure.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Brand strength &amp; market share<\/b><span style=\"font-weight: 400;\"> \u2192 MC is low but without a strong brand, it is still difficult for a business to succeed.<\/span><\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"Hien_dai_hoa_quy_trinh_quan_ly_chi_phi_cung_Bizzi\"><\/span><strong>Modernize your cost management process with Bizzi\u00a0<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<figure id=\"attachment_999971300\" aria-describedby=\"caption-attachment-999971300\" style=\"width: 1200px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-999971300\" title=\"Bizzi is the ideal solution for businesses looking to take their cost management to the next level.\" src=\"https:\/\/bizzi.vn\/wp-content\/uploads\/2025\/03\/bizzi-expense.jpg\" alt=\"Bizzi is the ideal solution for businesses looking to take their cost management to the next level.\" width=\"1200\" height=\"675\" srcset=\"https:\/\/bizzi.vn\/wp-content\/uploads\/2025\/03\/bizzi-expense.jpg 1536w, https:\/\/bizzi.vn\/wp-content\/uploads\/2025\/03\/bizzi-expense-300x169.jpg 300w, https:\/\/bizzi.vn\/wp-content\/uploads\/2025\/03\/bizzi-expense-1024x576.jpg 1024w, https:\/\/bizzi.vn\/wp-content\/uploads\/2025\/03\/bizzi-expense-768x432.jpg 768w, https:\/\/bizzi.vn\/wp-content\/uploads\/2025\/03\/bizzi-expense-18x10.jpg 18w\" sizes=\"(max-width: 1200px) 100vw, 1200px\" \/><figcaption id=\"caption-attachment-999971300\" class=\"wp-caption-text\">Bizzi is the ideal solution for businesses looking to take their cost management to the next level.<\/figcaption><\/figure>\n<p><span style=\"font-weight: 400;\">Expense management software is increasingly being adopted by businesses, especially in the e-commerce and shipping services sectors, to improve operational efficiency through process automation and effective budget management. <\/span><b><i>Bizzi <\/i><\/b><span style=\"font-weight: 400;\">is one of the leading cost management software solutions, trusted by large enterprises such as Masan Group, Mondelez International, Pierre Fabre,... thanks to its superior automation power and integration capabilities.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Not only simply supporting businesses in managing costs, Bizzi also helps optimize resources and increase efficiency through breakthrough features such as automatically navigating approval flows by unit, regulations, and established authorizations; analyzing costs and financial reports in real time; scanning data and checking the validity of <strong><a href=\"https:\/\/bizzi.vn\/hoa-don-dien-tu\/\">Electronic invoice<\/a><\/strong>,\u2026<\/span><\/p>\n<p><span style=\"font-weight: 400;\">With a user-friendly interface design, Bizzi Expense is the ideal solution for businesses that want to improve cost management, modernize processes and aim for sustainable development and long-term competitiveness.<\/span><\/p>\n<ul>\n<li aria-level=\"1\"><b><i>Link to register for a trial of Bizzi products: https:\/\/bizzi.vn\/dang-ky-dung-thu\/\u00a0<\/i><\/b><\/li>\n<li aria-level=\"1\"><b><i>Schedule a demo: https:\/\/bizzi.vn\/dat-lich-demo\/\u00a0\u00a0<\/i><\/b><\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"Ket_luan\"><\/span><b>Conclude<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The following article answers the question <strong>What is marginal cost?<\/strong> along with suggestions regarding <strong><a href=\"https:\/\/bizzi.vn\/quan-ly-chi-phi\/\">cost management<\/a><\/strong> efficiency. Marginal costing is an important concept in business and finance, helping businesses make effective production, pricing and cost management decisions. Understanding the concept, formula and meaning of <strong>What is marginal cost?<\/strong> will help build a suitable business or investment plan.<\/span><\/p>\n<p><strong>Read more:<\/strong><\/p>\n<ul>\n<li><strong><a href=\"https:\/\/bizzi.vn\/chi-phi-san-xuat-la-gi\/\">What is manufacturing cost? 6 common types of cost<\/a><\/strong><\/li>\n<li><strong><a href=\"https:\/\/bizzi.vn\/chi-phi-san-xuat-chung-la-gi\/\">Accounting for general production costs according to Circular 200<\/a><\/strong><\/li>\n<\/ul>","protected":false},"excerpt":{"rendered":"<p>Marginal cost is an important indicator that helps businesses optimize production. Controlling and reducing marginal cost\u2026<\/p>","protected":false},"author":56,"featured_media":999971679,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"content-type":"","inline_featured_image":false,"footnotes":""},"categories":[263],"tags":[],"class_list":["post-999971546","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-kien-thuc"],"acf":[],"_links":{"self":[{"href":"https:\/\/bizzi.vn\/en\/wp-json\/wp\/v2\/posts\/999971546","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bizzi.vn\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bizzi.vn\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bizzi.vn\/en\/wp-json\/wp\/v2\/users\/56"}],"replies":[{"embeddable":true,"href":"https:\/\/bizzi.vn\/en\/wp-json\/wp\/v2\/comments?post=999971546"}],"version-history":[{"count":10,"href":"https:\/\/bizzi.vn\/en\/wp-json\/wp\/v2\/posts\/999971546\/revisions"}],"predecessor-version":[{"id":999977032,"href":"https:\/\/bizzi.vn\/en\/wp-json\/wp\/v2\/posts\/999971546\/revisions\/999977032"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bizzi.vn\/en\/wp-json\/wp\/v2\/media\/999971679"}],"wp:attachment":[{"href":"https:\/\/bizzi.vn\/en\/wp-json\/wp\/v2\/media?parent=999971546"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bizzi.vn\/en\/wp-json\/wp\/v2\/categories?post=999971546"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bizzi.vn\/en\/wp-json\/wp\/v2\/tags?post=999971546"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}